State public company execs grab up stock as prices fall

Keith E. Busse’s frustration at the share price of Steel Dynamics Inc. boiled over Oct. 16.

"When people bailed out of commodities, buddy, they bailed out with a lot of horsepower. And they’ve [driven] this thing
to
almost a silly level, where I think we yesterday were below our actual book value," said Busse, the Fort Wayne-based
company’s
CEO, on a conference call with analysts and investors. "So I think the shares are just truly way, way oversold."

That day and the next, Busse bought 95,000 shares of Steel Dynamics stock. He paid nearly 80 percent less than what he would
have paid if he’d bought in June at the stock’s most recent peak.

The bad news for Busse is that, since his buying binge, Steel Dynamics’ shares have fallen another 21 percent.

The unprecedented plunge on Wall Street the last three months has spurred a couple of dozen executives and directors at Indiana
public companies to scoop up shares in their own companies. Some stopped in September, right as the markets really got bad.
Others started buying in November, as the stock prices for some companies reached lows not seen in decades.

The Indiana executives have joined an avalanche of corporate insiders buying across the country. As of Nov. 18, insiders
were buying 42 percent more stock than they were selling, according to data from Minnesota-based stock brokerage Emergent
Financial.

"Initial data indicates that insiders are more bullish now than at any time since the two weeks immediately following
the
Black Monday market crash of October 1987," wrote Ben Silverman, director of research at InsiderScore.com, in a Nov.
20 research
report.

He added, "Time will tell whether insiders are correct with their call, but in the midst of a hundred-year storm, they
are
the one group of investors expressing long-term optimism."

IBJ examined open-market purchases from Aug. 21 through Nov. 21 by officers at Indiana’s
50 largest public companies. Not
included were stock grants or the exercise of stock options.

The biggest buyers during that period were the officers of Carmel-based insurer Conseco Inc. Chairman Glenn Hilliard, CEO
Jim Prieur, Chief Financial Officer Ed Bonach and two other officers bought a total of 316,000 shares in September after the
company’s investments were hammered by business failures in the financial sector. By the time they jumped in, the stock had
swooned 68 percent from its peak for the year.

Conseco’s stock price has continued to languish, even after the company posted better-than-expected earnings Nov. 6. So Prieur
bought another 40,000 shares Nov. 18.

In all, Prieur has spent more than $1 million of his own money buying Conseco stock.

Prieur declined to comment for this story. But on a Nov. 6 conference call with investors, he expressed frustration that Conseco’s
shares were trading for about $2 apiece.

"This is an incredibly low valuation," he said. "At peaks in markets, you frequently see the expression being
used that some
shares are priced for perfection. At less than two times earnings, Conseco is now priced at the very other end of the valuation
spectrum."

A positive signal?

Buying by officers and directors is typically viewed as a good thing by investors.

"They’re the insiders and they ought to know what’s going on. It’s a strong statement," said Mark Foster, chief
investment
officer at Kirr Marbach & Co. in Columbus, Ind. Foster said his firm checks insider buying to identify companies worthy
of
closer analysis.

Foster acknowledges that some corporate officers buy primarily to signal confidence to investors. But he thinks most buy because
they want to turn a profit.

"It’s always said that insiders sell for a variety of reasons, but they only buy for one — because they think the
stock
is cheap
and it’s going up," Foster said.

That’s why Bob Laikin buys.

"I personally buy only to ‘make money,’" Laikin, CEO of cell phone distributor Brightpoint Inc., wrote in an e-mail.
"Signaling
confidence is not a motivating factor in my view."

Laikin bought 20,000 Brightpoint shares between Aug. 21 and Sept. 5, spending $155,000. But he hasn’t bought any more since,
even as Brightpoint shares have fallen another 50 percent.

Other Brightpoint officers have purchased shares, too. That’s something Foster likes.

"We actually prefer to see a broad range of participation in those buys," he said. "So you know there’s a strong
consensus
feeling among insiders."

There has been broad buying at Fort Wayne-based Tower Financial Corp. The bank company’s CEO and three directors purchased
more than 32,000 shares since late August.

One of the directors — and the biggest buyer of all — is Busse, CEO of Steel Dynamics. Since Oct. 17, the day
after
he groused
about his own company’s price, Busse has acquired 24,600 shares of Tower, shelling out nearly $224,000. He got the shares
at a 34 percent discount to their high for the year.

Conspicuously absent from any recent insider buying are some of Indiana’s biggest corporate names, including Eli Lilly and
Co., WellPoint Inc. and Simon Property Group Inc.

That’s not a great sign to Indianapolis money manager Don Woodley.

"It is always a bit of a red flag if there’s no insider buying over some reasonable period of time," said Woodley,
a principal
of Woodley Farra Manion Portfolio Management.




Buying with abandon

Some corporate insiders sprung to action only after their companies’ stocks had fallen precipitously.

Officers at electronics retailer HHGregg Inc. didn’t budge when the company’s stock price began to fall in early September.
But in November, with the stock off more than 60 percent from its yearly high, two officers bought with abandon.

CEO Jerry Throgmartin purchased 104,000 shares Nov. 10-21, shelling out more than $481,000. His son Gregg, senior vice president
of store operations, chipped in $149,000 to acquire 31,000 shares.

Through a spokeswoman, Jerry Throgmartin declined to comment.

Buying by high-level executives means more than buying by other officers.

"A vice president responsible for a division of the company, that is one thing," 
Woodley said. "But if it’s the president or

CEO of the company, the chief financial officer, the chairman of the board, those kinds of guys have a whole view of the 
company."

A mix of executives has been on a buying spree at oil refiner Calumet Specialty Products Partners LP. Four executives combined
to buy nearly 13,000 shares Nov. 18-20. They spent a total of $100,000.

Chief Financial Officer J. Patrick Murray II chipped in for 1,000 of those shares. But most were bought by vice presidents.

Jennifer Straumins, one of the buyers, who also serves as the company’s investor relations director, did not return a phone
call seeking comment.

Whether these efforts mean the end of the stock market pain is near remains to be seen.

"Insiders have tried to call a market bottom three times since August 2007 and have failed on each occasion," wrote
Silverman,
at InsiderScore.com. However, he added, "insiders still have a strong record of recognizing inflection points in the
market."