WuXi Pharma Tech (NYSE:WX) continued to slide, during my absence. One (main) concern is heavy insider selling (source: seekingalpha) lately, after the secondary offering was suspended on May 4.
I double checked the F1 filings for secondary offering (principal and selling shareholders), and found its CEO Dr. Ge Li was going to sell 8 million shares, and he unloaded 200,000 shares on May 30 according to AOL finance. BTW, it is a bit strange I could not find those transactions at SEC web site. Adding insult to the injury, United Overseas Bank (UOB) said it was going to sell 2.1 million shares at $18.4 each, according to Reuters. I guess they must need cash badly (hint: sub-prime trouble). Seriously, from its F1 it appears to me UOB is a venture investor in WuXi, and I am not surprised to see it wants to cash out some (note it intended to sell those shares in the now aborted Secondary). In other words, UOB still sells the shares planned in the Secondary, but the Wuxi management did not.
My gut feeling is, WX is a demaged stock now. The big question is it a demaged business? I will do more readings including its 20-F annual report. Hopefully I can get an answer soon.
Appendix:
a message from Yahoo MsgBoard, which I kind agree especially on “get rich quick” mentality in China.
“Somehow, I’m not much surprised by this insiders’ selling news. The mentality of the people in the whole country is pretty much “getting rich overnight” if they can, and no matter how.Those high exec of wx had been waiting so long, once it’s time they could do it, they would by instinct reach to the pot and dig in right away. In their mind, getting $4 million right now for a sure thing compared to getting maybe $6 mil a year later, they would choose $4 mil right away (remember their cost of the stock it 0) – shareholder’s interest is not even on their radar screen. One exec may think if he did not sell, but all others did, he would be the #1 fool. That’s how it happened. That’s why you don’t see the world class company growing up in China yet, not that the people are not smart enough, they are too smart, but mostly for themselves, and loose the sight of long term goal for building a world class corporation.
I recall someone’s predication of wx stock to reach $30 in 30 days here weeks ago, I could see it happen only by reverse split – where is that voice? Also, another one kept saying those exec in wx were more of doers, but less talkers – talking only 50% of the things when they could do 100% – maybe for themselves, not for stock holders, not even for the long teams interest of wx, or correct me if that voice can still make some sense out of it.”
It takes much more than just a few years for a society to be mature in the free market type of environment like the western world (look at stock market in China (up and done just like wx) – people may look alike in those exec chairs, but not think the same way. Nothing wrong with the business model of the wx due to its perfect timing in the industry, but its management team. Not that you could not touch those stocks, just don’t use the same format to measure them. If you lose, you could know why, and learn a thing or two from it.”