Throwing money away

Today I thought I'd just perform a little tallying of the kinds of losses insiders have suffered on their various purchases over the past couple of years.

I'll start with founder Bob Saxe, the least prolific of the buyers (which probably tells you something right there):

(Losses are based on a price of REFR of $3.00 per share, today's low as of noon Eastern.)

4/20/05: 500 shares REFR @ $5.15 : loss = $1,075
11/12/03: 200 @ $9.48 : loss = $1,296
11/11/03: 200 @ $9.31 : loss = $1,262
11/10/03: 200 @ $9.81 : loss = $1,362
Total loss for Bob Saxe = $4,995

Now President Joe Harary, who has also been absent from the buy side for a while:

6/3/04: 1,729 @ $8.1875 : loss = $8,969
Total loss for Joe Harary = $8,969

Vice President Michael LaPointe, also nearly a year removed from his last purchase:

6/28/04: 500 @ $7.09 : loss = $2,045
5/20/04: 500 @ $8.798 : loss = $2,899
4/19/04: 500 @ $10.44 : loss = $3,720
1/26/04 175 @ $12.05 : loss = $1,584
1/26/04: 250 @ $11.98 : loss = $2,245
Total loss for Michael LaPointe: $12,493

Now we get to the more prolific buyers. First up, director and former forum stock promoter Al Malvino, with a lesson on how not to dollar-cost average:

6/17/05: 1000 @ $3.62 : loss = $620
3/18/05: 1000 @ $5.86 : loss = $2,860
2/18/05: 500 @ $5.97 : loss = $1,485
1/19/05: 500 @ $5.98 : loss = $1,490
12/29/04: 400 @ $6.00 : loss = $1,200
12/2/04: 600 @ $6.11 : loss = $1,866
11/22/04: 300 @ $6.74 : loss = $1,122
7/27/04: 700 @ $6.70 : loss = $2,590
7/9/04: 300 @ $6.77 : loss = $1,131
6/16/04: 569 @ $7.85 : loss = $2,760
6/4/04: 731 @ $8.674 : loss = $4,147
5/24/04: 1000 @ $8.846: loss = $5,846
5/18/04: 600 @ $9.05: loss = $3,630
5/17/04: 600 @ $9.20: loss = $3,720
5/14/04: 700 @ $9.526: loss = $4,568
5/12/04: 700 @ $9.70: loss = $4,690
5/3/04: 400 @ $9.71: loss = $2,684
2/4/04: 3000 @ $12.125: loss = $27,375
2/3/04: 1000 @ $12.12: loss = $9,120
1/7/04: 1000 @ $8.91: loss = $5,910
12/30/03: 1000 @ $9.12 : loss = $6,120
12/5/03: 300 @ $9.10 : loss = $1,830
11/10/03: 300 @ $9.30 : loss = $1,890
10/21/03: 300 @ $11.65 : loss = $2,595
10/8/03: 305 @ $11.55 : loss= $2,608
9/26/03 300 @ $12.05 : loss = $2,715
9/3/03: 300 @ $12.00 : loss = $2,700
7/30/03: 200 @ $13.35 : loss = $2,070
7/15/03: 800 @ $14.56 : loss = $9,248
7/10/03: 200 @ $15.35 : loss = $2,470
Total loss for Dr. Al Malvino: $123,060

As bad as that is, it's still peanuts next to the prize patsy of the board of directors, Corporate Secretary Victor Keen. His buys may have been fewer in number, but he made them count. Against himself:

5/4/05: 10000 @ $3.84 : loss = $8,400
8/19/04: 16300 @ $5.88 : loss = $46,944
7/19/04: 5500 @ $6.75 : loss = $20,625
6/29/04: 10000 @ $7.21: loss = $42,100
6/14/04: 5000 @ $7.79 : loss = $23,950
11/11/03: 5000 @ $9.36: loss = $31,800
9/30/03: 5000 @ $11.51: loss = $42,550
7/15-16/03: 5000 @ $14.50 : loss = $57,500
7/3/03: 1300 @ $14.96 : loss = $15,548
7/3/03: 5000 @ $15.00 : loss = $60,000
6/25/03: 10000 @ $12.05 : loss = $90,500
Total loss for Victor Keen: $439,917

On aggregate, just from buys made in the last 24 months, insiders have lost a total of $589,434.

The purpose of this observation is not to gloat, mind you. I am quite certain that all of the above insiders, even Mr. Keen, can easily afford to lose everything they have invested in REFR stock.

Rather, I just want to observe that when you ask a shareholder why he continues to have faith in this company, one of the things inevitably highlighted is the company's stellar track record of insider buys versus sales. After all, the insider must know something good is in the offing, or they wouldn't buy, would they?

Well, the above illustrates just what that line of thinking got the average investor in REFR. A huge pile of losses with no apparent way out of them.

That is what comes from letting others do your thinking for you.