Uh-Oh...Disney selling stock

[Peter Pirate]

Reports today state that Roy Disney is selling 7.5M shares of his Disney stock (or 40%). This makes Michael Eisner easily the largest shareholder.

Gotta be some tears flowin' in those 3 & 4 numbered vehicles.

Seriously though, I can't see how this can be construed as good news. Anybody?

 

[Bob O]

I agree that this isnt likely good news. But in fairness you need to know why is was sold??? Was it due to negative feelings toward the stock/rebalancing of his investments/needed molney??

 

[OnWithTheShow]

I doubt very much whether 7500 is really 40% of Roy's stake.

 

[hopemax]

I looked at the reports. It's 7.5 million shares, so it is a lot. What I found interesting is that Roy retains voting rights for 5 years, and if the stock rises over the next 5 years, he will get a financial benefit. The man is 73 years old, and we've never really heard of his family being involved in the company, so I'm wondering if this is part of of his plan for whenever the "inevitable" happens and making sure his family gets the best financial deal, and since the stock is close to a 14-month high, now is the time to arrange it. The news reports also say, at the end of the 5 years he has the option to keep them.

Do we have anyone who can explain "variable prepaid forward" contracts?

 

[Another Voice]

Roy Disney is an extremely wealthy man outside of his Disney stock. He did very well for himself in the years when Ron Miller and friends ran the company and Roy was on the outside. He doesn not have to sell anything so his family is secure.

Why's he's selling...sometimes in business you just have know when to give up.

The company is Eisner's, has been for a long time. All the press and rumors about "the board getting angry and making Eisner work harder" were nothing but wishful thinking.

Please enjoy your Comcast snow globes.

 

[hopemax]

I hope you don't think that what I said, meant "making sure his family would be financially secure." I meant he would want them to get the best deal, if they aren't going to be involved in the company after he is gone. With the stock where it is, near a 14-month high, he might think this is going to be the best time to make the deal. I was kind of implying that he wanted to lock in a good price while he can, because he doesn't think it will be that good in the future. No matter how much money a person has, they aren't going to want to give their heir's a sinking ship when they don't have to.

 

[Peter Pirate]

Sorry for the typo Mr. Show...Thanks for the correction Hope. I've corrected my original.

 

[bmoc_ny]

This is a link to a copy of the SEC form that Roy filed it shows how many shars he plans to sell. All of this is public info and can be found on www.thomsonfn.com



http://sec.thomsonfn.com/sec/SecPro...=HTML&cont_qualifier=C&doc_product=E&viewer=N

 

[Bstanley]

Not to worry about Roy, he's got a 4 leaf 'Shamrock' clover to fall back on.

I guess he's decided that stage-managing one takeover of the company is enough in one lifetime.

Comcast? really?

Seems like a pretty big bite for them to take...

-bruce

 

[WDWHound]

I wonder if this is tied to the recent wave of cuts in the Animation group and the company's apparent move away from traditional animation in favor of CG. Roy is a big supported of traditional animation and these decisions may have been the last straw.

 

[Planogirl]

Well, he still has 10 million shares and still has voting rights so he isn't likely dumping the stock for some reason. He claims that he just wants to diversity and still continues to support the Disney Company. OK.

 

[DisneyKidds]

Well, he still has 10 million shares.

I suppose if he drops some other large chunks soon we might be able to draw some conclusions. Other than that, it doesn't seem someone would keep over $200 mil worth of stock in a company they thought was going down the tubes. It will be interesting to watch.

 

[mjstaceyuofm]

I think it's just timing - the stock's up, he's 73 years old, and there are new tax rates effective this year that will help him and his family keep more of the money as he sells his stock. I personally am not reading too much more into it than that at this point...

 

[DancingBear]

A publication with a discussion of variable prepaid forward contracts:

http://www.cmsfs.com/pdfs/having_your_cake.pdf

And a short explanation:

The Variable Prepaid Forward (or Variable Forward Contract) has become a very popular hedging/monetization tool for investors that have concentrated equity positions. The VPF is an attractive tool because it offers immediate liquidity and downside price protection while deferring the tax impact of a stock sale until settlement (typically 2-5 years later). You also get to retain some upside price potential and collect all dividends during the contract period.

 

[raidermatt]

Seems like a pretty big bite for them to take...

Depends on which slice they were going after...

 

[DisFan2]

Insider trading is rarely an accurate gauge of a company's financial soundness. If he was dumping the stock because of something he knew, which the shareholders did not, it would come back to bite him in the end. I wonder how bad Martha feels about that Imclone trade now?

 

[aporue]

http://money.telegraph.co.uk/money/...242&sSheet=/money/2003/08/22/ixfrontcity.html

Disney nephew selling shares after clash with Eisner

 

[Planogirl]

Odd article aporue. At the beginning it mentions a quarrel but then the rest of the article makes it sound like everything is just fine. I still think that since Roy is keeping most of the stock, that it is likely just him diversifying the Disney holdings.

 

[DisneyKidds]

I still think that since Roy is keeping most of the stock, that it is likely just him diversifying the Disney holdings.

I agree. Also, I saw more on this Variable Prepaid Forward deal. From the looks of it that contract will only net Roy and family about $16 and change per share, far below the current stock price. However, he maintains voting rights and participates in any stock gains over the life of the contract. Hardly sounds like someone simply trying to dump his stock before the bottom falls out.

 

[doombuggy]

Seven Million shares???!! It makes my 30+ shares sound pretty paltry!