Corporate Insider Selling...
Just How Bad is it? ...

Jan 28 2005;

If you read the financial press... you may have noticed lately a few articles warning of a trend towards "insider selling" by the executives of many of America's largest corporations.

"Insider selling" is often seen as a negative warning signal for a stock - because if the "insiders" of a company are participating in widespread selling (and aren't buying) their own stock - it's often interpreted as a lack confidence in a company's near term future stock performance (particularly when those who are in a position to know the company best... the insiders... are selling in large ratio's).

One of the things that made me take a closer look at "insider selling" was the lack of specific data (or hard information) from some of the recent articles warning about insider selling... such articles rarely give detailed information to illustrate the depth of the situation, or more importantly; to back up their claims.

So given the recent warning articles, and compounded by all the recent talk about restructuring Social Security; by allowing private citizens to put some of their own hard-earned money into the stock market... I thought it worth while to look deeper into insider selling... because, if the "insiders" of company's aren't buying their own stock, why should anyone else be compelled to?.

So, I ended up looking at approx 15 large companies... and what I found does indeed paint a trend towards large scale insider selling.. so just how bad is it?...

(I obtained the following info from Yahoo Finance on Jan 28, 2005...
and I also compared the info to "insider transaction" stats available at MSN MoneyCentral...)

Amazon.com: Recent Net Insider Transactions...

Shares Purchased = 0
Shares Sold = 2,453,000
Buy / Sell Ratio = 0 to 2,453,000 Shares
(I also checked "Insider Transactions" at MSN MoneyCentral, which also shows "0" (zero) shares recently purchased by AMZN Insiders).

Apple Computer: Recent Net Insider Transactions...

Shares Purchased = 0
Shares Sold = 3,671,000
Buy / Sell Ratio = 0 to 3,671,000 Shares
(I also checked "Insider Transactions" at MSN MoneyCentral, which also shows "0" (zero) shares recently purchased by AAPL Insiders).

Computer Associates: Recent Net Insider Transactions...

Shares Purchased = 0
Shares Sold = 461,000
Buy / Sell Ratio = 0 to 461,000 Shares
(I also checked "Insider Transactions" at MSN MoneyCentral, which also shows "0" (zero) shares recently purchased by CA Insiders).

Cisco Systems: Recent Net Insider Transactions...

Shares Purchased = 2,000
Shares Sold = 2,605,000
Buy / Sell Ratio = 1 to 1,302 Shares
(I also checked "Insider Transactions" at MSN MoneyCentral, it shows 2,000 shares recently purchased by CSCO Insiders).

Dell: Recent Net Insider Transactions...

Shares Purchased = 0
Shares Sold = 25,668,000
Buy / Sell Ratio = 0 to 25,668,000 Shares
(I also checked "Insider Transactions" at MSN MoneyCentral, which also shows "0" (zero) shares recently purchased by DELL Insiders).

Ebay: Recent Net Insider Transactions...

Shares Purchased = 3,000
Shares Sold = 1,236,000
Buy / Sell Ratio = 1 to 412 Shares

Ford: Recent Net Insider Transactions...

Shares Purchased = 5,000
Shares Sold = 189,000
Buy / Sell Ratio = 1 to 38 Shares

General Electric: Recent Net Insider Transactions...

Shares Purchased = 10,000
Shares Sold = 249,000
Buy / Sell Ratio = 1 to 24.9 Shares

Google: Recent Net Insider Transactions...

Shares Purchased = 0
Shares Sold = 6,407,000
Buy / Sell Ratio = 0 to 6,407,000 Shares
I also checked "Insider Transactions" at MSN MoneyCentral, which also shows "0" (zero) shares recently purchased by GOOG Insiders.

Hewlett Packard: Recent Net Insider Transactions...

Shares Purchased = 490
Shares Sold = 252,000
Buy / Sell Ratio = 1 to 514 Shares
I also checked "Insider Transactions" at MSN MoneyCentral, it shows 490 shares recently purchased by HPQ Insiders.

IBM: Recent Net Insider Transactions...

Shares Purchased = 0
Shares Sold = 169,000
Buy / Sell Ratio = 0 to 169,000 Shares
I also checked "Insider Transactions" at MSN MoneyCentral, which also shows "0" (zero) shares recently purchased by IBM Insiders.

Intel: Recent Net Insider Transactions...

Shares Purchased = 1,000
Shares Sold = 2,048,000
Buy / Sell Ratio = 1 to 2,048 Shares

Microsoft: Recent Net Insider Transactions...

Shares Purchased = 638,000
Shares Sold = 39,713,000
Buy / Sell Ratio = 1 to 62 Shares

Oracle: Recent Net Insider Transactions...

Shares Purchased = 20,000
Shares Sold = 55,088,000
Buy / Sell Ratio = 1 to 2,754 Shares

Sun Microsystems: Recent Net Insider Transactions...

Shares Purchased = 910,000
Shares Sold = 4,844,000
Buy / Sell Ratio = 1 to 5 Shares

Wal-Mart: Recent Net Insider Transactions...

Shares Purchased = 0
Shares Sold = 12,758,000
Buy / Sell Ratio = 0 to 12,758,000 Shares
(I also checked "Insider Transactions" at MSN MoneyCentral, which also shows "0" (zero) shares recently purchased by WMT Insiders).

Yahoo: Recent Net Insider Transactions...

Shares Purchased = 0
Shares Sold = 9,432,000
Buy / Sell Ratio = 0 to 9,432,000 Shares
(I also checked "Insider Transactions" at MSN MoneyCentral, which also shows "0" (zero) shares recently purchased byYHOO Insiders).

So, the $64K question in this case could be; why are the "insiders" selling their stock at such high ratio's lately?.

From the company's featured above, Sun Microsystems had the highest "buy" ratio, however, Sun Microsystems "insiders" still managed to sell 5 shares to every 1 share they bought... while Dell Computers has the highest "sell" ratio, as Dell "insider" sold over 25,000,000 shares without even purchasing a single one of their own shares.

So, what is it that have turned the "insiders" into such massive net-sellers lately?.