INSIDE TRACK: Executives Buy Up MEMC Shares, Help Stem Selloff

Date : 08/18/2011 @ 8:29AM
Source : Dow Jones News
Stock : Sunedison, Inc. (PN) (SUNEQ)
Quote : 0.043  0.003 (7.50%) @ 3:52PM

INSIDE TRACK: Executives Buy Up MEMC Shares, Help Stem Selloff

MEMC Electronic (NYSE:WFR)
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Executives at MEMC Electronic Materials Inc. (WFR) snapped up nearly $2 million in the company's shares in early August, helping stem a stock price slide prompted by a broad market selloff that started in July.

Shares of St. Peters, Mo.-based MEMC began falling in late July as markets around the world sank because of concerns about Europe's debt problems and political wrangling in the U.S. On Aug. 4, MEMC shares slid 19% after the maker of silicon wafers cut its full-year outlook, even as it beat analyst expectations by tripling profits in its second quarter. Shares slid to their lowest point in nearly a decade over the next four days.

Starting Aug. 5, Stephen O'Rourke, an MEMC vice president, bought 37,500 shares, more than doubling his stake, while four directors made their first purchases of the company's shares. Chief Executive Ahmad Chatila also bought MEMC stock, though not in the same volume as he did a year earlier.

The wave of executive support for MEMC, which was disclosed in regulatory filings, appears to have helped reverse the slide in the stock's price, which is up nearly 29% from the recent low. Market watchers say the purchases were a compelling display of confidence in the company, which manufactures and sells wafers to the semiconductor and solar industries.

On Wednesday, MEMC shares fell 3.6% to $6.40.

Through a spokesman, the MEMC executives declined to comment for this story.

John Hardy, an analyst at Gleacher & Co., said global turmoil sparked the selloff and that concerns about weak pricing in one of MEMC's businesses, wafers for the solar energy industry, likely increased investor concerns. Some governments in Europe, the biggest market for solar power equipment, have cut subsidies to encourage the use of alternative energy, raising questions about demand for MEMC's products. The executive purchases should help mollify investor concerns, he said.

Ben Silverman, research director at InsiderScore.com, noted that some of the executives, including Chatila, didn't buy as much this year as they did last year, which might indicate they don't have the same level of conviction in the company.

Still, he called the purchases "significant," adding that they should be interpreted as very meaningful.

"It definitely gives you a reason to reconsider whether the stock's lower valuation is appropriate or not," Silverman said.

-By Corrie Driebusch, Dow Jones Newswires; 212-416-2143; corrie.driebusch@dowjones.com;

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