|
By: David DaSilva
Business in Vancouver
October 31, 2000
How rich did the high-tech, dot-com craze of
last winter and spring make some insiders? Now
that high-tech stock valuations have settled down
to what experts call more realistic prices, BIV
looked at the insider trading reports for a handful
of select Vancouver-area technology and Internet
companies whose share prices soared throughout
the year.
The answer: a stunning estimated total of at
least $145-million-worth of shares have either
been sold over the past year or are about to be,
according to insider reports filed with the Ontario
and B.C. Securities Commissions and the U.S. Securities
and Exchange Commission For example, four insiders
at Vancouver's Burntsand Inc. (BRT:TSE; www.burntsand.com),
an e-business solutions provider, sold $5.36-million-worth
of shares over a three-week period in late February
and early March. The shares were offloaded just
as the company's stock peaked at all-time highs
of $15.75.
Prior to the spring frenzy, Burntsand's stock
hovered at around $2. It closed last week at $5.
But by far the most impressive sell-offs originated
from those in the boardrooms of high-tech powerhouse
PMC-Sierra Inc. (PMCS:Nasdaq; www.pmc-sierra.com).
Insiders at Burnaby's semiconductor solutions
maker raked in an estimated combined US$59 million
over the year.
Records show that company director James Diller
sold US$35.49-million-worth of PMC-Sierra shares
over the past year.
President and CEO Bob Bailey divested US$16.62-million-worth
of PMC-Sierra stock. He also realized a paper
gain of US$23.44 million upon acquiring shares
from exercising his options. (Figures referring
to "paper gains" are only an estimate, based on
the value of the company's shares at the time.)
Chief financial officer John Sullivan has sold
US$6.68-million-worth of shares over the past
year. He also realized a paper gain of US$5.47
million upon acquiring shares by exercising his
options.
Chief operating officer Gregory Aasen made US$983,806
selling his company shares. He also received a
paper gain of US$12.68 million in exercising his
options. He exercised his options at US$4 per
share in June when the company's stock was trading
at US$199.12 each.
PMC-Sierra officials were not available for comment.
PMC-Sierra's stock closed last week at US$161.13.
Last year in October it was at US$50. Its 52-week
high was US$255.50.
QLT Inc.'s retiring chief financial officer Kenneth
Galbraith sold $13.10-million-worth of shares
in the pharmaceutical product company. Galbraith,
who declined comment, unloaded most of his shares
in August, a month before he announced his departure
from QLT (QLT:TSE, QLTI:Nasdaq; www.qltinc.com).
But before the nouveau riche celebrate their
newfound wealth, those insiders must still dole
out the government's share, said Adrian Mastracci,
president of KCM Wealth Management Inc.
(www.kcmwealth.com) in Vancouver, a fee-only financial
advisory firm.
Half of the capital gains amount received upon
sale is taxable, under the recently announced
inclusion rate. If the person were at the 50-per-cent
higher-end tax bracket, the government's portion
would be significant, he said.
Tax deferral plans, however, are not recommended:
"In general I shy away from tax deferrals because
most of them have not worked out so you have a
low probability of making any money. And especially,
if one is an entrepreneur, he is going to want
to put the money back out on something that has
another flavour of a capital gain."
Better to pay the taxes and move on, he said.
"It is not that bad of a problem to have," he
added.
Mastracci said he typically recommends the well-to-do
"park" their money (in T-bills, GICs and other
safe instruments) until they have developed a
long-term plan. Mastracci said he wouldn't work
for a client until they have a clear idea of their
five-, 10- or 20-year horizon.
After dreaming up an asset allocation strategy,
the insider would also want to ensure that he
or she would have a float of cash to invest in
other high-tech start-ups.
"He is an entrepreneur. He is a risk-taking individual,"
Mastracci said. "They are certainly well aware
of other opportunities."
Other insider totals are detailed below. They
are based only on transactions made during the
past year, by choosing an arbitrary date of October
1, 1999, which is just before the winter/spring
run up of tech stocks.
Three local Pivotal Corp. executives have filed
notice with the SEC in the U.S. that they intend
to sell some of their shares. Keith Wales, the
chief technical officer, intends to sell US$4.6
million; Vincent Mifsud, chief financial officer,
intends to sell US$761,250; and Salvatore Sanci,
a vice-president, intends to sell US$1.14 million.
|
