Insiders Moves in Face Of Rally Spark Concern

Wall Street Journal ^ | August 18, 2003 | Peter A. McKay

[Sam Cree]

The economy and the stock market may be perking up, but the nation's corporate executives aren't yet buying into the recovery.

In fact, they are selling their company's stock at levels not seen in more than a year -- a potentially ominous sign for the market in the months ahead.

[Sam Cree]

Sorry for the double title, didn't see that coming.

[fight_truth_decay]

According to the company's latest proxy, filed in November, Gates owned 621 million shares. What he has sold is a drop in the bucket. In the last quarter of 2002, Microsoft repurchased 19 million shares, worth about $1 billion.

Funny how they leave out the question most would ask: How many shares does Gates own total?

[Who dat?]

At Microsoft, Chairman Bill Gates has sold 17 million shares since July 23, including one million shares sold Wednesday for between $25.53 and $25.77 a share, according to SEC filings.

Bill Gates has actually been pretty busy lately. Among other things, he set up a pretty substantial endowment for the Seattle area United Way. The idea behind it is to pay salaries and administration costs through the endowment so that 100% of all funds donated to the UW end up being distributed to the charities.

He also has some sort of foundation that matches funds donated to the UW. I was told that the Seattle area was number two in terms of dollars donated to UW – only New York City beat them. That’s pretty impressive; dinky Seattle being second only to NYC.

He’s involved in quite a few other things too. All of them require money. I suspect MS stock pays for nearly all of it. My understanding is that he ultimately intends to donate a very large percentage of whatever he has.

[Tunehead54]

Uh oh (bump)!

---

Still - over time - the Dow looks pretty good.

[Libertarianize the GOP]

ping

[fight_truth_decay]

Experts say Microsoft's recent decision to phase out employee options didn't affect the recent numbers

Now Microsoft pays a dividend..which @16 cents a share, that's $99.5 million on the 621 million shares Gates owned at that date.

[fight_truth_decay]

Gates (Bill and Melinda Gates Foundation, EDS) also will provide for all "teacher training" -$56 million-in Maine schools for the Lap Top Program - lap tops being purchased for all 7th and 8th graders.

[Sam Cree]

"But to many people who study such things, the latest numbers remain bad news. "The activity we're seeing in insider sales, without any buying to balance it out, is pretty broad-based, not like anything we've seen in awhile," says David Coleman, editor of the Vickers Weekly Insider Report. "I wouldn't be surprised to see a 20% market correction over the next three months."

I don't know enought to know if Coleman is to be taken seriously. It would be nice to see exactly where the revenue goes from the insider Microsoft sales. Probably it's a good point that they could be a drop in the bucket.

[fight_truth_decay]

insider sales of tech stocks rose 34% to $571 million

Not to dominate this post, but we also have to take into consideration : 'retirement' which many tech 'insiders' have chosen to take now reaching their 50's and 60's. The streamlining necessary to remain profitable reaches all the way into upper management..we might use the nasty word "forced retirement." Times have changed, the marketplace has changed and many key people are relinquishing their titles to younger talent.

Guess this article just leaves out facts that should have been added to this piece.

Thanks,
f_t_d

[fight_truth_decay]

I know where some of the revenues is going from 'other' tech company insider sales. These 'movers and shakers' are part of 'venture capitalist groups' or investing on their own in new technology startups..small private companies-nipping at the heels of such giants such as Microsoft (example)...the future is not all doom and gloom; it can be just the opposite - trememdously exciting.

[Beck_isright]

If everyone did their homework and actually checked the insider sales reports, they would be stunned by the activity this year.

[cdrw]

"It's different this time" are famous last words for investors. Nobody knows the future and I'm not saying that these rationalizations of insider selling are wrong or implausible. BUT - the numbers are the numbers and insiders sales have been a reasonable "leading economic indicator" for the stock market over a long market history. Sure there could be some boomers retiring and the like - but if they thought their options would be worth significantly more next year then why cash out now? They are cashing out because they DO NOT believe their options will increase in the near term. People with large enough option holdings to influence the insider sales data have also got assets elsewhere to cover near term living expenses.

Everybody wants the great bull to return. Take a careful look at the dow chart that is posted on this thread. Notice that there are several periods of a decade or more during which there was no net change in the dow price. It is entirely possible for the economy to recover and for the stock market to flat-line.

Diversify Diversify Diversify

[Sam Cree]

"The activity we're seeing in insider sales, without any buying to balance it out, is pretty broad-based"

That, from the article, has kind of an ominous ring to it, as it implies more insider trading than just one company.

I note on the chart that it took 25 years for the market to fully recover from 1929, though the slowest part of the recovery was at the end.

I remember the flat period during the 70's, I hope what we get now will be no worse than that.

[cdrw]

I hope not too. That's the trick with the equity markets. They do grow in the long run just as the economy does but the "long run" can easily be 20-30 years. Most people in their 20's don't save a whole lot of money so ... that 20-30 yr planning horizon can be too long for people planning retirement. Buying the top of an upsurge can be rather disasterous for someone in the late 30's or beyond. They may not be able to hold long enough to ever receive those long run average returns.

Buy and hold is a great strategy for the mutual fund companies who make their living from management fees. The rest of us have to live with the fact that taking a 50% hit requires a 100% gain just to get back to break even.

[Sam Cree]

"Buy and hold is a great strategy for the mutual fund companies who make their living from management fees"

I've usually been a "buy and hold" guy. But recently I've had to rethink that one. I believe, as you do, that equities are hard to beat long term, as long as the USA exists as we know it. But with today's uncertainties, when is "long term" going to pay off? In my mind, there are any number of potential events that could cause the market to take a drastic plunge. And recovery could take a long time or short time, who could say? Scary.

I'm a lot less savvy than some of the guys who post here. But many traditional investments don't look so great to me just now.

Real estate is likely overvalued at the moment, stocks are unpredictable, bonds don't even look like a good bet with the low interest rates. The whole situation kind of baffles me.

[cdrw]

We are in one of the most difficult investing environments we've seen in decades. It all sucks and if you hold cash you lose money against inflation and taxes. I have started to branch out into commodities and currency - looking for markets that are trending but I still think diversification is essential - some stocks, some bonds, some real estate, maybe a touch of gold, maybe a touch of something based in a non-US currency like European bonds and or Canadian energy trusts - spread it around.