Wednesday, December 06, 2006

Gates and Google lead insider stock sales

Bloomberg reports that last month's stock sales by corporate executives exceeded purchases by the widest margin since 1987.

Executives including Microsoft Corp.'s Bill Gates, Google Inc.'s Eric Schmidt and Kohl's Corp.'s William Kellogg in aggregate sold $63.18 of shares for every $1 they bought in November, an analysis by Bloomberg of data from the Washington Service showed. That's the highest since at least January 1987.

Insider selling and buying are no longer the straightforward indicators they were once taken for. You now have company spokesmen putting a PR slant on the buying/selling action of important officers and executives. Sales of shares by a company officer could be chalked up to "diversification" or something as innocuous as funding for a charitable trust.

Conversely, buying patterns of company shares can no longer be seen as a straightforward bet on a rise in the company stock. Oftentimes, the buying activity of company officers will be revealed as nothing more than a concerted effort to promote the stock and bull it higher.

Still, there is value in looking at insider transactions at an individual company if you know what to look for. Plus, insider trade data in the aggregate is still seen by some investors as a valuable tool.

The data has ``value for investors,'' said Wayne Reisner, who oversees $1.6 billion at Carret Asset Management in New York. ``It's people who are very familiar with their company and their stock, and they are making a statement.''

See the link to the above Bloomberg story for more.