SCH insiders unloading...
NEW YORK, Sept. 15, 1999 1:00 p.m. ET (JagNotes.com)
Schwab's Top Brass to Unload Hefty Chunks of Stock; So What Else Is New?
hen the shares of an institutional darling skid more than 50% from their
52-week high, it would hardly be unusual for corporate insiders,
assuming everything is going well at the company, to do some aggressive
buying.
That's certainly not the case, though, with online trading kingpin
Charles Schwab & Co. (SCH).
On the contrary, Schwab insiders, including key officials at the highest
levels, are unloading the stock despite its sharp drop.
Schwab, which traded as high as 77 1/2 over the past 52 weeks, is
currently 37 3/8, an approximate drop of 52.5%.
Now to the sellers.
From Aug. 23 through Aug. 31, four Schwab insiders filed their
intentions to sell 2,410,000 shares, or nearly $90 million worth.
Chairman Charles Schwab leads the selling parade with the proposed sale
of 1.5 million of the shares, worth about $56 million.
The company's high-profile president and co-CEO David Pottruck has
registered to sell another 800,000 shares, valued at almost $30 million.
This intent to unload so much stock caught the eyes of the trackers of
insider activity at Thomson Financial, which felt compelled to issue a
special alert on the proposed heavy sales of Schwab shares to its
clients in its weekly publication, Insider Research Services.
In its report, Thomson noted that:
—Chairman Schwab has been a prolific seller of the company's shares.
—Pottruck's planned selling represents an escalation in his
profit-taking. His last sales were done in May at prices more than 20%
higher than current levels.
SEC filings show that Charles Schwab and his interests over the last 12
months have filed their intentions to sell 4,475,500 shares.
Meanwhile, Pottruck has registered to sell 1,350,000 shares over the
same period.
Though both Schwab and Pottruck still retain large holdings of Schwab
shares, Thomson feels it's noteworthy that the recent planned sales are
being done at such depressed prices.
Why the heavy insider selling?
A Schwab spokesman didn't respond to inquiries seeking comment.
One dogged tracker of online trading activity, Charles Biderman, editor
of the Trim Tabs investment newsletter in Santa Rosa, Calif., says maybe
the Schwab officials see the handwriting on the wall—namely, a marked
slowdown in the online trading business.
He notes that online trading activity peaked in April, what with many
Internet stocks—the darlings of the online traders—having subsequently
fallen so sharply. And this, in turn, he says, has prompted many
investors to desert online trading and return to the mutual fund fold.
"What's clear," Biderman says, "is that online trading could continue to
experience decreasing activity, leading as well to a sharp profit
slowdown at online trading firms. And Schwab, being the king of the
online traders, could suffer the most."
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