Can This Stock Go Higher?

Is Motorola (NYSE:MOT) headed higher, or lower?

That's the question we ask when we evaluate insider buying and selling. We ask because how executives spend their paychecks is often a reflection of what they think of their companies' prospects. Here's how Moto's managers have spent their money over the past year:

Sources: Form 4 Oracle, Capital IQ, and Motley Fool CAPS. (Data current as of Jan. 5.)
* 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 that 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: moderately bearish
Whatever goodwill Motorola's Droid smartphone created with consumers may soon be gone. Google (NASDAQ:GOOG) yesterday introduced the Nexus One phone during a press conference, and it, too, will use the search king's Android operating system.

The timing stinks. Earlier today, an Oppenheimer & Co. analyst estimated Motorola's fourth-quarter Droid and Cliq smartphone shipments at 1.4 million to 1.5 million, up from earlier estimates of 950,000, The Associated Press reports. The projection includes an estimated 1.2 million Droid handsets sold. With the Nexus One due in the spring, those numbers could fall.

What's more, only now is Motorola getting smart about focusing on its highest-value businesses and divesting the rest. Were The Big G not standing in the way, Droid and future Android handsets could have delivered massive growth to a less-encumbered Moto.

Are executives worried? If they are, they aren't showing it. Most are holding the shares they already own. The lone seller, Karen Tandy, cashed in only a small portion of her direct holdings in November.

I'm nonetheless bearish because of the disparity between Tandy's sale price ($9.09), and earlier buying from Co-CEOs Sanjay Jha and Gregory Brown, both of whom bet big at under $4 per share in February. Moto could still have room to run. But when higher multiples meet increased competition, higher returns rarely follow.

Do you agree? Disagree? Log into Motley Fool CAPS today and tell us how you would rate Motorola.

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