Eye on Insiders: Disney

Watching insiders is like participating in a weeks-long stakeout. You expect something to happen, but you don't know what. So you settle in, sip your coffee, and wait for clues to solving the big case.

Here, the "case" is direction: Which way is your stock headed? The "clues" come in the form of insider buying and selling action. Have a look at Walt Disney (NYSE: DIS  ) over the past year.

Insider Rating

Bullish
Three buys, one sell, at lower than current prices.
Most recent buy on the heels of Disney's announced purchase of Marvel Entertainment.

Business Description

Globally known brand popular with young children. Marvel acquisition will likely appeal to older kids, too.

Recent Price

$28.29

CAPS Stars (out of 5)

****

Percentage of Shares Owned by Insiders

7.5%

Net Buying (Selling)* Over Past Year

($1.72 million)

Last Buyer (% Increase)

John Pepper, director
3,000 shares at $25.433 average on Sept. 2
(Purchase bolstered direct holdings by 4.8%)

Last Seller (% Decrease)

Thomas Staggs, Sr. VP and Chief Financial Officer
75,000 shares at $25.381 average on May 8
(Sale represented 26.9% of direct holdings)

Competitors

CBS (NYSE: CBS  )
News Corp. (Nasdaq: NWS  )
Time Warner (NYSE: TWX  )

CAPS Members Bullish on DIS Also Bullish on

General Electric

CAPS Members Bearish on DIS Also Bearish on

Home Depot (NYSE: HD  )
Ford Motor (NYSE: F  )

Recent Foolish Coverage of DIS

Disney Wakes Up
5 Reasons Disney Is Buying Marvel
Mickey Mouse Robs Spidey

Sources: Form 4 Oracle, Capital IQ, and Motley Fool CAPS.
*Open market sales and purchases only.

What we're tracking here, and why
Insider buying data can be confusing. Here, I'm concentrating only on buying and selling conducted in the open market. With most of these transactions, insiders control the timing. Other times, they're buying or selling under the purview of a 10b5-1 plan. Either way, personal holdings are being bought and sold.

Those personal holdings matter the most -- they're the shares executives hold for investment, rather than compensation. Employee stock options are different; they're compensatory in the purest sense. I've stripped out options-related buying and selling from the calculations you see above.

The Foolish view: Bullish
You don't have to look far to find those who think Disney's $4 billion purchase of Marvel Entertainment (NYSE: MVL  ) is a mistake.

Shortly after the deal was announced, CAPS investor joeinkc wrote the following:

I think that a lot of Marvel fans will be pissed by being owned by Disney and will dump the stock. If they wanted to own Disney, they'd have bought it, and this really puts a ceiling on what otherwise was a potential windfall. It will be "get out while you can" or wait for $30 plus 0.75 x Disney stock.

I'll admit to being disappointed by Disney's acquisition; Marvel is my top holding, and a stock I expected to be a multibagger for our family portfolio. Now I'll never know what might have been.

Still, I'm planning to hold the Disney shares I inherit. A decent and growing dividend, coupled with inherited catalysts -- Iron Man 2 in 2010, a rich licensing pool, etc. -- should lead to above-average returns from here. Or at least, that's what one insider appears to believe.

Board member John Pepper has made three buys over the past year, all at prices lower than what the stock trades for today, which also happens to be lower than what my colleagues at Motley Fool Inside Value estimate for Disney's intrinsic value. The lone seller -- CFO Thomas Staggs -- has held firm since that sale in May. Smart move, I think.

But that's also just my take. Do you agree? Disagree? Log into CAPS today and tell us how you would rate Disney.

And if you want me to take a Foolish peek at the insider action of your favorite stock, email me here or use the comments box below. I'll write this column as often as you, our readers, demand.

Disney and Home Depot are Motley Fool Inside Value picks. Disney and Marvel are Stock Advisor selections.

Fool contributor Tim Beyers had stock and options positions in Marvel at the time of publication. Check out his portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. The Fool's disclosure policy has its eye on you.


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