It is a pleasure to respond to you after having read a lot of your helpful posts as a lurker. I was checking a post about insider selling at AOL, a lot of it when the AOL share prices were in the high 70's, 80's and 90's. Look where the share price is now. I agree with you. We should not read anything into insider selling. After all, Wall St. does what it wants, regardless!
Peacelover,
Thanks for your post. I'm looking forward to yours as well! I'm trying to think of some of the reasons why insider selling can actually be deemed a positive:
1. If it is done only in moderation, it does not preclude a desire for pre-merger liquidity by the selling insiders.
2. Again, if done in moderation, it may mean that the next quarter at least should be relatively safe. This is under the theory that officers of a corporation don't want to be cited, in shareholder suits, for selling shares with knowledge of immediately impending bad news. If there were to be bad news, it should at least skip a quarter after the insider sales (at least under this theory).
3. Still again, if done in moderation, it probably is most suggestive of the fact that high-tech insiders get a good measure of their compensation in the form of options, and these options do have to be sold after a period of time.
4. If done in excess, watch out! Nike insiders sold tremendous percentages of their holdings last summer. It wasn't long thereafter that the stock began to tank.
Gary Korn |
