August's Stock Market Turmoil Tests Faith of Corporate Insiders
NEW YORK -- In the days immediately after Iraq's Aug. 2 invasion of Kuwait, with the stock market sinking like a stone, Ken Lay, a director of Compaq Computer Corp., says he decided it was "time to hedge my bets a little bit."</br></br>Mr. Lay lightened his holdings of several stocks -- except for energy issues -- including Compaq Computer, filings with the Securities and Exchange Commission show. He sold 5,000 Compaq shares, which represented 33% of his Compaq holdings, for $270,000.</br></br>"I was concerned about the overall tone of the market, and about the Middle East," Mr. Lay said. While Compaq management is doing "a superb job," he said, "even good companies, in a downdraft like this, get hurt."</br></br>Mr. Lay sold his shares for $54 each on Aug. 10. In New York Stock Exchange trading yesterday, Compaq closed at $47.875, up $1.50. Now, Mr. Lay says, the stock represents a buying opportunity -- and he says he plans to buy some as soon as SEC rules allow.</br></br>For officers, directors and other corporate insiders, the stock-market turmoil resulting from the Middle East crisis has been a test of faith. This is "the most important period for insider filings since October 1987," when the Dow Jones Industrial Average crashed 22.6% in a single day, said Robert Gabele, president of Invest/Net, a North Miami, Fla., company that compiles and analyzes the SEC insider data. In a period of uncertainty such as the present, he said, "insider buys are important as a sign of confidence."