Stocks to Avoid Now?

If you're thinking of selling your stocks, you're not alone. According to insider tracker Form 4 Oracle, executives at these three companies cashed in shares this week:

The week's selling

Company

Closing Price 12/4/08

Total Value Sold

52-Week Change

BlackRock (NYSE: BLK  )

$115.74

$4,157,330

(42.0%)

Hansen Natural (Nasdaq: HANS  )

$27.37

$3,010,705

(36.8%)

Equifax (NYSE: EFX  )

$22.59

$1,202,546

(37.7%)

Sources: Fool.com, Yahoo! Finance, Form 4 Oracle.

Insiders sell for many reasons, from compensation, to estate or tax planning, to just plain getting out -- but those reasons are rarely (if ever) given. That said, these are open market sales, made by executives who have 100% control over the timing of their trades. Not so at American Tower (NYSE: AMT  ) and Intuit (Nasdaq: INTU  ) , whose insiders have mostly been cashing in on a predetermined schedule known as a 10b5-1 trading plan.

I point this out because our top three sellers tend to exhibit good timing. Most of the time, anyway. Back in 2004 and 2005, insider Mark Hall was selling shares of Hansen Natural ahead of its multibagger run-up. Whoops. The perhaps not-so-good news for current Hansen shareholders? He and several other insiders have been spot-on since.

Turn over that BlackRock
If Hall has been inconsistent, BlackRock's Robert Kapito has been a superstar seller. He's recorded three profit-preserving sales since April -- including his latest, made on Tuesday.

Interestingly, our 120,000-plus Motley Fool CAPS community might have predicted the stock's 2008 decline. How? Our CAPS chart shows that the community briefly downgraded the stock to two stars, right around April. BlackRock's rating recovered a star for about two months, but then, in June, it returned to two stars, where it remains today:

Metric

BlackRock

CAPS stars (5 max)

**

Total ratings

239

Bullish ratings

199

Percent Bulls

83.3%

Bearish ratings

40

Percent Bears

16.7%

Bullish pitches

24

Bearish pitches

5

Data current as of Dec. 5, 2008.

"Doesn't look at if many private equity deals will be going through in the next year or so, which is bad new for these guys," wrote CAPS investor jester112358 in late November.

Agreed, if only because we've seen this phenomenon before. Fool co-founder David Gardner, an All-Star CAPS investor, in March predicted that Lehman Brothers would fall further because of the collective intelligence in CAPS: "So let me make it clear, with Lehman stock around $32 as I write this: I'm looking right here, right now, this hour. We are saying: Relative to the S&P 500, Lehman's stock is going down." [Emphasis added.]

You know what's happened since. Niche investment bankers have survived, as have Goldman Sachs (NYSE: GS  ) and Morgan Stanley (NYSE: MS  ) , but investors in these stocks must feel as though they've gone one too many rounds with Mike Tyson.

Could BlackRock shareholders face a similar fate? CAPS investors seem to think so. Beware, Fool.

There's your update. See you back here next week for more stocks you should avoid.

Get the inside scoop on stocks of all sizes with related Foolishness:

Fool contributor Tim Beyers also writes for Motley Fool Rule Breakers. Check out his portfolio and his Foolish writings. And if you're socially inclined, follow Tim on Twitter, where his handle is "milehighfool."

Tim didn't own stock in any of the companies mentioned in this article at the time of publication. The Motley Fool's disclosure policy is the undisputed heavyweight champ among disclosure policies.


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