Back in June, the Disciplined Investor was poking fun at the prodigious rate at which Crocs (NASADQ: CROX) insiders were dumping stock as the media hyped the company's prospects. In a satirical letter to the company's shareholders on behalf of the CEO, Andrew Horowitz wrote:

As for me, I still support the stock. I see no reason why it cannot double from here. I am feeling generous and want to give back to those who have helped me....With all of the supporters and bulls looking for shares to go to $150, I want to make sure there are plenty of shares available for those who have not yet been able to capitalize. So selling a large portion of my shares is merely an altruistic move to allow these that do not have shares the ability to now have access at these inflated prices. Why should I be so greedy? Since I have sold about 600,000 shares and now have a smaller position (234,243 shares held directly) I fell much better that I have allowed others to enter the "Crox Club". Now there are 600,000 more shares available for others to buy. I really feel good about this.

Now we're in November. Shares of Crocs have taken a hit, losing nearly half their value since the beginning of the month. And predatory securities lawyers have rushed to the scene, filing class-action lawsuits against the company, filled with vague allegations of securities fraud. Given that nearly every company that has the nerve to report a bad quarter gets sued these days, I'm not inclined to read much into the lawsuits.

But there's another question for investors: Should the insider selling that Horowitz was pointing to have been a red flag for investors? According to The New York Times, "The moves by executives at Crocs, which went public in early 2006, are typical of the behavior of senior management after a very successful offering ... Maybe so, but that's cold comfort to investors who bought shares recently but are now walking around with losses that are neither comfortable nor fashionable. Especially when you consider that none of the officers and directors at either company have bought a single share on the open market this year."

I'm still skeptical about using insider trading as a predictor of future returns, especially with a young company that has made so many executives rich on paper -- they want Ferraris too! Ultimately, Crocs will succeed or fail because of its ability or inability to successfully introduce new products to make more than what is an essentially single-product brand.

I'm highly doubtful of their ability to do that so I wouldn't touch the stock -- even if the Crocs insiders bought back all those shares tomorrow.