There has been a little insider selling this week in front of earnings for Google (GOOG). Insider selling is sometimes a misleading indicator. Oftentimes investors look at insider selling as a bearish signal that the leaders of the company must think something is wrong.
However, there are a number of reasons why an insider might consider selling stock, that do not necessarily mean that they are bearish on the company. For example, maybe they are looking at acquiring a new home, or have a tax bill that needs to be paid. It might be that they are just cashing in on their retirement and taking it out in normal distributions. Bill Gates is a good example of this. He has done nothing but sell his stock over the last 15 years to use his wealth for his charity.
But when the co-founder of Google, Sergey Brin sells nearly a $48 million dollar stake on April 5, and then this week the CEO Larry Page sells three different lots of around $16 million a piece, it makes one raise an eyebrow. In both situations, the sale was the exercise of an option and then subsequent sale of stock. Why now? Is there something in the near future that could cause the stock to drop?? Oh…wait a minute, the company is set to announce earnings today (Apr 14) after the market close. Like I said before, there are a number of reasons for insider selling. The only thing I question today is the timing of these sales and whether or not the insiders know something we don’t. I guess we will see tomorrow.
Greg Jensen
OptionsANIMAL CEO & Founder
