Posted on 09/19/2004 9:59:45 AM PDT by Steven W.
At the height of Rathergate, it appears Sumner Redstone, Chairman and CEO of Viacom Corporation, has issued his first verdict on the collapse of credibility for its CBS News operation and 60 Minutes programming. In disclosure mandated by the SEC, "STATEMENT OF CHANGES OF BENEFICIAL OWNERSHIP OF SECURITIES", Redstone reveals his transaction promptly followed the disasterous & defiant appearance by Dan Rather on last Monday evening's edition of the CBS Evening News. In official filing, and with Viacom currently selling near 5 year lows, records reveal Redstone sold 341,500 shares of Viacom stock options for an otherwise undisclosed 401K account on Tuesday of last week, September 14, 2004. Overall, with shares still selling for $11,952,500 at only $35 a share, his gross profit from the transaction appears to have yielded around $6,744,625 in cash.
This seems Enron like. The CEO telling the public and enployees everything is rosey while laying off stock by the boat-load. It should be no suprise to anyone that CBS is rotten at the top. EXTRA: Calling Oliver Stone to write a screen play! Conspiracy abounds.
--- It is interesting to note that an average hurricane causes some 1.5-2.0 billion in damage.
In just a week, Dan Rather's hatred of George Bush, and George Bush's family, has cost American stockholders, American retirees, and American businesses the same damage that a hurricane yields.
Perhaps even more - Significant drops in Viacom stock influence the indexes and averages in all stocks - thus affecting hundreds of millions of other investment yields, insurance yields, and retirement accounts.
Following that logic, it could be said that ANYBODY who sold stock since the story broke has been cheated by Dan Rather, and the executives covering up for him and stonewalling at CBS.
That pic is great!
I doubt Mr. Redstone will fire himself; he owns 70+% of the voting Viacom stock. He is Viacom for all practical purposes.
1) If S.R. had been dealing in listed options (as, for example, your idea about covered call writing), this would conventionally be written as ''sold (or wrote) x,xxx calls'' rather than ''sold xxx,xxx call options''. xxx,xxx listed call options would represent xx,xxx,x00 shares, and the implied value per share would therefore be under $1 -- not a chance in the world of that.
2) To have achieved a 6+ mil profit on a position of gross value over 11 mil, the striking price of the options involved -- check the arithmetic! -- been under $17. VIA and VIAB shares haven't traded that low in years (split-adjusted, haven't been under $20 since 1998), hence there would be no **listed** options available today having a striking price around that level.
3) Reported volume in VIA/VIAB options hasn't been anywhere near the level indicated in the article (although, granted, S.R. might have disposed of a listed option position like this one over several days' time).
There are a couple of other minor inferences that might accurately be drawn along these lines, too. However, the author could (and should) easily have clarified matters by NOT writing that S.R. ''sold xxx,xxx stock options'', but rather ''exercised xxx,xxx stock options at a price of yy.yy, and sold the shares so acquired at a price of zz.zz'' -- all of which numbers unquestionably appeared in (or could be worked out from) the required SEC filing.
FReegards, and good trading to you!
Whoa!
"Thus, this is *NOT* panic stock selling by Sumner (too bad, though). "
It is the appearance of panic that is a deciding factor, (Dan Rather's logic of "it isn't the papers that matter" and becomes the model)that will panic others.
The mere perception of CEO panic then becomes a self fulfilling truth if the public and stockholders suspect panic and rush to dump.
Correct. I have not seen whether it was restricted stock or not.
If Form 4, he reports it no laer than two days after the sale.
Rats leave a sinking ship
Typical democrat sc*mb*g. SO much for the little people.
It is good to know that CBS News is dragging the entire evil Viacom company into financial ruin.
While I agree that the amount is minimal compared to his total holdings, I believe the form indicates that he dumped well over 95% of his options. That's assuming I am reading the form correctly (351,580 before and 10,080 after the transaction).
If this is correct, i think one can make a case that he is dumping his options, as their value is much more sensitive to stock price variations (depending on their strike price) than the underlying equities. If the strike price of the options were fairly close to the current market price, he would have much more powerful incentive to dump them ASAP than he would with his equity holdings. That's why I find this so damning. He knows / fears the stock is going to sink below his strike price and that it will probably be stuck there for a long time.
This smells very bad to me.
Mr. Redstone needs to explain himself.
REDSTONE, SUMMER M
DEDHAM,MA 02026
VIACOM INC/CHAIR MAN OF THE BOARD
5/3/2004
$1,000
Kerry, John
REDSTONE, SUMNER
DEDHAM,MA 02026
2/3/2004
$1,000
Kerry, John
REDSTONE, SUMNER
NEW YORK,NY 10036
VIACOM INC
9/26/2003
$1,000
Daschle, Tom
REDSTONE, SUMNER
NEWTON,MA 02459
VIACOM
5/13/2004
$1,000
Kennedy, Edward M
REDSTONE, SUMNER M
DEDHAM,MA 02027
NATIONAL AMUSEMENTS INC. & VAAEM I/
12/5/2003
$1,000
Kerry, John
REDSTONE, SUMNER M
NEW YORK,NY 10036
VIACOM
3/28/2003
$1,000
Leahy, Patrick
REDSTONE, SUMNER M
NEW YORK,NY 10036
VIACOM
3/28/2003
$1,000
Leahy, Patrick
''Insiders'' or no, the difficulty in trading profitably in instances such as Rathergate is that you and I and our colleagues here can have exactly ZERO knowledge of when the next bit of news will ''break'' concerning the scandal. Yet, in swing trading, timing is everything. Hardly a sound game for us to play, true?
Contrast this type of news driven trade to famous and recurring trading opportunities such as the old (and wonderfully successful) play of buying MacDonnell Douglas call options a day or two after one of their MD-10 aircraft went down. The mkt-driving event in such a case is standalone and discrete; something happens, nervous nellies dump their shares, the price drops. A week or so later, the mkt realises that there has been no fundamental change to the company, and any ''bad parts'' stories or rumours or other potential problems, if they exist at all, are well off into the future. The price rebounds, generally to just where it was pre-crash, the call buyers sell back at a tasty profit, and life goes on.
BTW, in most cases, it won't be SEC-defined insiders who will be swing trading in event-driven mkts such as VIA just now. Instead, the participants will be hangers-on to those folks, whether individuals or funds. The typical formally-defined insider does not usually trade actively in his/her own company's shares and options because, for one thing, he or she is always under the microscope, and for another, the required paperwork can become very nearly unmanageable...and woe betide if a filing deadline is missed!
Post 76 also makes several excellent points.
Excellent. And that photo of Kerry squatting at the airport, should accompany the report. Obviously Kerry was dumping Viacom stock.
Dan lied, Sumner cried.
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