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Insider Buying at Corning; Stock Shouldn't Go Much Lower

Post Time:Nov 12,2008Classify:Company NewsView:418

In the past week, three prominent insiders have purchased a large number of shares of Corning (GLW). The ex-CEO and a descendant of the company's founder, James Houghton led the way by purchasing 100,000 shares valued in excess of $1 million. He was followed by CFO James Flaws and board member Gordon Gund, who each also purchased 100,000 shares valued at more than $1 million.

Gordon Gund has made great insider purchases in the past. In mid-2002, Gund made the following purchase:
31 Jul 2002
GUND GORDON
Buy 1,000,000
1.6-1.85
$1,725,000

While the stock continued to fall a bit through early October that year, Gund's purchase would be valued at nearly $10 million today and in excess of $29 million at the peak of the stock's value between 2002 and today. That's quite an impressive return.

While the markets may drag GLW down more, it is reasonable to believe that GLW will outperform the markets. Based on the insider buying, it is also reasonable to assume that an acquisition at today's prices are low risk in the long term.

Now consider that another economic stimulus package may be headed to the consumers just in time for Christmas season and you can see why insiders might be so confident. People will be looking to entertainment to help divert their thoughts from the sagging economy.

You also have the fact that GLW is now very close to tangible book value which sits around $8.50. The PEG is below 0.5 and the forward P/E is below 8. The company is still profitable and cash flow positive, has a lot of cash and liquid assets and has very little debt. Even in today's irrational market, it is difficult to see this going much lower, it at all.

Source: seekingalpha.comAuthor: shangyi

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