Eye on Insiders: First Solar

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 First Solar (NASDAQ:FSLR) over the past year.

Sources: Form 4 Oracle, Capital IQ, and Motley Fool CAPS. Data current as of Sept. 20.
^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
Renewable energy is a promising but often confusing investing opportunity. Solar seems like an obvious, no-brainer winner. But if that's true, then why is oil/water tycoon T. Boone Pickens betting on wind?

Perhaps because the solar market suffered a brutal downturn last year and has yet to fully recover. First Solar, for its part, is now on its second CEO and mired in a "turf war," according to my Foolish colleague and solar expert, Toby Shute.

CAPS investors such as ArgusPanoptes don't like that sort of talk. Here's what this member wrote last week:

It's a hot potato isn't it? All that money rushing so fast ... into an industry where a small change could be the big difference. There are too many smart people with upcoming products, preparing to cut into the pie. Company will succeed in their vision, but the stock won't be the vision of the shareholders. The push into the physical reality of big solar will be slow and steady but mostly slow. I see some investors jumping ship soon to join smaller caps.

That call might have looked prescient had it been made last summer, when institutional holders were selling in bulk at north of $250 per share. Not so much today, when insiders have been selling either via options or on predetermined schedules, and at much higher prices than the stock trades for presently. The last executive to sell on the open market did so at a 17% premium to Friday's close. My guess is that executives will remain in a holding pattern until the share price sees at least a double-digit recovery.

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

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.

Get more of the inside scoop with related Foolishness:

• Here's who I had my eye on last time.
• Why you shouldn't fret about the unemployment rate.
• How bad are these bank failures again?
• Cash-starved investors should consider this strategy.