Fortune: Insiders sell as before the end of the world

Can hundreds of insiders selling shares, make a mistake? The Stock Exchanges in March continues to rally, the S & P 500 rose by 55%, increase in unemployment in the U.S. slowed, and credit markets stabilized. But against this backdrop that one indicator was bearish. Top managers of corporations sell shares at a pace that was the last time occurred at the beginning of the crisis of low-quality mortgage two years ago, wrote on Sept. 11 Fortune.

Although the wave of insider selling is not necessarily portends the fall of exchanges, it suggests that people who know the trends of business firsthand, do not believe that current stock prices are justified economic fundamentals.

"It's not very difficult - said Charles Bayderman (Charles Biderman), head of research firm Trim Tabs. - Insiders know the situation better than you. If prices are too high, they sell.

Bayderman estimated that in August at $ 31 dollar sales of shares by insiders accounted for $ 1 dollar they made acquisitions, not the only analyst who notices it. Ben Silverman (Ben Silverman), head analyst at InsiderScore.com, said that sales of insiders is currently the most aggressive in the summer of 2007. In his view, this "orgy of sales" deserves attention, since corporate insiders have been aggressive buyers during the spring fall on stock exchanges. "They bought when prices were low, so it makes sense Let it so that they are doing now, when prices rose," - said Silverman

In the case of companies such as discount broker TD Ameritrade (AMTD), then they are selling with abandon. According to the U.S. Commission on Securities and Exchange Commission, its president, Joe Moglia (Joe Moglia) April earned by selling shares of more than $ 10 million by selling each of the last 106 days of exchange. A spokesman for TD Ameritrade said that sales Moglia carried out in accordance with a pre-agreed plan submitted to them by the SEC in August of last year. Under this plan, its brokers are using stock options he received eight years ago, and the underlying shares are sold every day, when the stock price exceeds a certain level.

Moglia is not the only insider selling at TD Ameritrade. Founder and former CEO Joe Ricketts (Joe Ricketts) and his wife Marlene in August, sold 5.7 million shares to finance the acquisition of marital baseball team Chicago Cubs. According to recent data, they owned 16% of the company.

According to Silverman, the sale of TD Ameritrade insiders should not cause serious concerns about the financial health of the company, because "special circumstances" - buying Cubs and the approaching expiration of options Moglia - are obvious. He believes that the more reason for concern arises when insiders suddenly make large sales with no apparent motive.

Thus, the general director of Fossil (FOSL) Tom Kartsotis (Tom Kartsotis) in August, sold shares of this manufacturer watches worth $ 25 million since March, Fossil shares increased in price more than doubled.

Director-General of the producer of video games company Activision Blizzard (ATVI), Kotik, Robert (Robert Kotick) and a member of the board of directors of the company, Brian Kelly (Brian Kelly) earned in August for $ 10 million by selling shares after the stock options. Although some stock options owned by Kotik, due to expire next year, while others are valid until 2014, and stock options owned by Kelly - until 2012. Shares were sold at a price roughly 50% higher than the lowest level of 52 weeks.

"The disparity between buyers and sellers are now enormous, - said Silverman. - These people consult with their checkbooks."

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