Boston Scientific's ($BSX) soon-to-be-departing chief financial officer has sold off nearly 600,000 shares in November on his way out the door, bringing nearly $7 million. But he's not the only one to cash in. As Barron's reported, a number of other senior executives also unloaded hundreds of thousands of shares, and some observers see the move as a predictor of more measured longer-term prospects for the rebounding company.
Jeffrey Capello, the Massachusetts medical device giant's executive vice president and chief financial officer, has been widely credited with helping to steer Boston Scientific through 5 years of financial struggle and reorganization. Barron's noted that he's held his current post since 2011 and been with the company itself since 2008, but Capello has said he wants to leave to find a broader management role outside the company.
From Nov. 1 to Nov. 27, Capello sold 586,205 shares to raise more than $6.9 million after exercising his options and selling. This follows another massive transaction at the end of August, when he made $5.6 million after selling 525,000 shares for an average $10.68 apiece (through options and open-market selling), according to the story.
As of Dec. 6, Capello now holds just 447 shares directly, Barron's said.
Six other executives also recently sold off thousands of shares. Barron's explained that senior vice president Kevin Ballinger made $401,674 after selling 333,334 shares; Jeffrey Mirviss sold off 26,000 shares and brought in $309,530, and Joseph Michael Fitzgerald sold 9,236 shares for $107,981. And then there's Keith Dawkins, an executive vice president, who exercised his options and sold off 138,850 shares to pull in more than $1.6 million. Another executive vice president--Timothy Pratt--also followed suit and made $240,376 after selling 20,132 shares. Even a director got into the mix; Ernest Mario sold 135,645 shares and pulled in nearly $1.6 million.
Why would all of these executives unload so many shares? Well, Capello is leaving, and it makes sense that he'd want to cash out as he gears up for his departure. Also, the company's stock price is up a mind-boggling 107% over the last 12 months as Boston Scientific has made progress through legions of layoffs, reorganization, the acquisition of promising new technologies and an aggressive push to get product through the approval process in multiple continents. Boston Scientific hovered at $11.88 in early trading on Dec. 9, down slightly from its October peak but up a bit in early trading.
Still, perceptions of a more sobering future for the company could be behind some of the transactions. Barron's cited some outside observers who saw the mass selling as not necessarily a good thing. David Coleman, editor of Vickers Weekly Insiders Report, told Barron's that the selling elicits caution for investors because executives are unloading their holdings in a way that differs from traditional trading patterns.
"I would view [the selling] as a cautionary flag for investors," he said.
Benchmark analyst Jan Wald, in a report cited by Barron's, said his firm believes a targeted price-to-earnings price target of $10 is a fair prediction for Boston Scientific, "though it does suggest that investors are weighing future prospects more heavily than near term results, which we believe is appropriate."
Boston Scientific did not comment on the Barron's story.
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