Defense/Aerospace Industries

[DewDiligence]

Boeing’s CFO Dumps Shares

http://online.barrons.com/article/SB126532958436640925.html

›The financial chief and two others sold 30,000 shares of the aerospace firm

FEBRUARY 5, 2010
By AVI SALZMAN

Aerospace and defense contractor Boeing (Ticker: BA) posted very encouraging earnings late last month, handily beating expectations. With the stock up significantly on the news, three insiders, including the chief financial officer, sold a total of $1.8 million in Boeing shares this week.

The largest sale came from Chief Financial Officer James Bell, who sold 20,000 shares on Monday for $1.2 million, or about $61.52 per share on average. It was Bell's first sale since 2005.

Director John Biggs, the former president, chairman and chief executive of TIAA-CREF, sold 2,400 shares after exercising options on Tuesday for $147,000, or about $61.32 per share.

Vice president and corporate controller Robert Pasterick sold 7,064 shares on Monday for $434,000, or about $61.49 per share. None of the insiders owns more than 1% of the company's stock.

It was the largest cluster of sales at Boeing in at least a year.

A company spokesman says the sales were for "personal financial reasons" and should not be construed to indicate any loss of confidence in Boeing's prospects. Top insiders, he added, have few windows during the year to sell stock.

But a note published at InsiderScore.com published prior to Biggs' sales were announced says the two other sales raise "significant red flags." Bell and Pasterick are the top two financial officers at the company; the sale came after a run-up in Boeing shares to levels not seen in more than a year; and they were the first non-options-related sales since July/August 2007, according to InsiderScore.com.

"With Boeing's earnings and, more importantly, guidance news baked into the stock now, we think the sales by Bell and Pasterick represent a near-term valuation call," the InsiderScore.com note said. "Our concern will grow if other insiders step up and take advantage of the stock's recent strength."

Certainly Boeing shares were on a run shortly before the sales. After the company reported fourth-quarter earnings well ahead of analyst expectations ($1.75 per share versus expectations of $1.36) on Jan. 27, shares soared 7.3% that day. The company also indicated that it didn't expect to reduce its 737 deliveries this year, which had been a significant concern for investors.‹