Baldor directors did some pre-Thankgsgiving shopping…

December 1, 2010

Yesterday, ABB announced that it was acquiring Baldor Electric (BEZ). Although six separate law firms have already announced that they’re investigating the pending deal, the news sent Baldor stock up over 40%.

As we do with most deals, we like to look through the target company’s previous filings to see if there were any interesting patterns. And we found two interesting Form 4s filed by Baldor directors. This one filed by director Robert J. Messey shows that on the day before Thanksgiving, Messey essentially doubled his stake in Baldor to 65,508 shares. Messey, the former CFO of Arch Coal (ACI) bought the shares at prices ranging from $22.31 to $45.15. It’s that last tranche of 5,280 shares that really sticks out since the shares were marginally underwater before the news was announced and had been exercisable since May 2007. The Form 4 was filed after the market closed on Monday. ABB has agreed to purchase Baldor for $63.50 a share, so even buying shares at $45.15, it’s quite a deal.

Messey wasn’t the only director (and oddly enough, former CFO) who went bargain shopping days before the deal was announced. That same day, Director Robert Proost, the former CFO of AG Edwards, filed this Form 4 that shows that he bought nearly 35,000 shares, also on the day before Thanksgiving, increasing his holdings from just over 20,000 shares to nearly 55,000 shares. Like Messey, one of the tranches exercised by Proost was marginally underwater at the time of the exercise. But that changed pretty quickly once the deal was announced on Tuesday morning.

Judging by the other Form 4s filed by Mssrs. Messey and Proost, it’s a pretty mild understatement to say that the purchases seem to be out of character. But given when the Form 4s were filed, there’s not all that much that an investor who had been paying attention to these particular filings could have gleaned. So we’ll just have to chalk this up to some pre-Thanksgiving bargain shopping, sans the crowds waiting in line at 3 a.m.

Image source: BlackFriday.com

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