Strayer (STRA) Large Insider Sell
I am casting a critical eye at Strayer (STRA). Besides trading at a high multiple of forward earnings, I find it hard to believe that people who get laid off in the coming months are going to be signing up for school at Strayer and that declining corporate reimbursements won’t affect the company. I just don’t buy the whole trading down story the company is pitching when some people will be trying to live day-to-day.
CEO and Chairman Robert Silberman describes Strayer education as relatively impervious to economic cycles, but also says,“If there is a major depression in this country and egregiously high levels of unemployment, I don’t think that’s a good thing. That would not help our business, but given what I’m looking at and our sense of what over the next 24 months looks like, I am not particularly concerned.” (Source: Strayer Q32008 Earnings Call)
However, this is exactly what is currently happening as unemployment levels are accelerating. We may not be experiencing a depression, but believing that the current environment isn’t one to be concerned about is looking at the world through rose colored lenses. The environment we are in now was just as true back in early November when the conference call was held. If Strayer is going to do such a great job in 2009, why sell so much stock? Either shares are trading at a significant premium, the outlook is probably bleaker than expected, or some combination thereof.
Although typically insider sells don’t necessarily mean much, I think Silberman’s insider transactions in 2008 are particularly noteworthy, as they constituted about $65M in total. Shares were also trading close to 52-week highs or trading at a significant premium when the transactions took place. Here is a recap of the transactions:
12/1/2008: Sold 131,478 shares at $228.40, total value of $30M
5/2/2008: Sold 100,000 shares at $190.85, total value of $19M
3/6/2008: Sold 33,500 shares at $145.08, total value of $4.86M
2/28/2008: Sold 66,500 shares at $162.25, total value of $10.8M