Dear Mr. Berko:

Is it possible to make money by using insider trading information, such as when Bill Gates sells a block of Microsoft stock? I know that insider buying and selling is first reported to the Securities and Exchange Commission in a complicated legal filing. Are there any Web sites that make this information available?

My next question concerns Vonage, the voice over Internet protocol phone company. I heard it’s going public this summer and might be a hot issue. Would you buy it in the aftermarket like many investors bought Google?

F.G., Indianapolis

Dear F.G.:

My good friend Pistachio Goldberg seems to have a knack for making money by following “insider” trading activity. There are sophisticated traders to whom that information is meaningful and each uses his own proprietary “hocus-pocus” calculus that makes complex use of puts, calls, strips and straddles to lock in a small profit on a large number of shares. Sometimes they’re right, and sometimes they’re wrong; fortunately for Pistachio, his wife and three children, he’s right much more frequently than he’s wrong. But he won’t tell me how he does it. He won’t even tell me his insider-trading source.

But I do know two sources that have the information you want. My first recommendation is www.vickers-stock.com. Vickers, owned by the venerable Argus Research, uses documents filed with the Securities and Exchange Commission to provide nearly immediate information on transactions and holdings by officers, directors and major shareholders. A Vickers subscriber can call his representative, and his call initiates a chain reaction in which your main rep and other members of the shrewd Vickers team will immediately endeavor to procure the insider trading data you need. Few civilians have ever heard of Vickers, whose clients are professional traders, hedge funds, mutual funds, international traders and portfolio managers. I’ve read some of their online publications and frankly, it’s a bit too sophisticated for me.

A second source of insider trading information is www.moneycentral.msn.com, and it’s free, which is always a good price. But comparing Vickers to Moneycentral is like comparing a Rolls Royce to a Model T. When you enter Moneycentral, click on “investing” then “stocks” then “insider trading,” then put in the company’s ticker symbol. It’s as easy as milk chocolate.

Just for giggles and grins, I pulled up the data on Microsoft Corp. (MSFT) and discovered that a few weeks ago, Bill Gates sold 15.5 million shares and took home (before taxes) $387 million. Wow! I could live very comfortably off the interest on the interest on that $387 million.

Sorry, but the Vonage offering doesn’t melt my ice. However, I’m in the minority, because I understand that this Internet-based phone-service provider is generating some heavy enthusiasm. Except for the preliminary prospectus that Vonage filed with the SEC, there’s really very little information on the company. I do know that Vonage tried for a solid year to find a buyer, but it couldn’t find anyone dumb enough. One prospective buyer made an interesting proposition and offered the selling shareholders a considerable sum, which was contingent upon Vonage making a profit. Well, that investor got a cold shoulder, a busy signal, a wrong number and a disconnect, all in five seconds.

Now it looks like the designated patsy will be the investing public. Because Vonage couldn’t find a buyer to bail out the initial investors, it has hired a Wall Street banker to turn the company from its present appearance to Shinola so it will gleam for the public.

Since its inception five years ago, Vonage (which pioneered VoIP) has signed up 1.4 million customers and accumulated more than $315 million in losses. Now Vonage is going to raise $250 million via a public offering (no price has been stated) to repay its investors, who have put up $659 million.

But with 2005 revenues of about $210 million, it may be a long time until those folks get their money back … and it may be a longer time until the investing public sees a profit on its investment.

I don’t think Vonage will be able to compete with the conventional phone companies (including cable operators) plus the providers of free VoIP service such as Google, Yahoo and Skype Technologies. This offering doesn’t ring my bell.

Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, Fla. 33429 or e-mail him at malber@adelphia.net.

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