Actionable Ideas for Companies and Sponsors
Insider Stock Sales Accelerating
Corporate insiders are taking advantage of near-record U.S. stock prices by selling shares in their companies at the fastest pace in two years. In the first three months of the year, there were approximately 12 insider stock-sale announcements for every insider stock purchase by Standard & Poor’s 500 Index companies, the highest ratio since January 2011.
During the first quarter of 2013, nearly one-quarter of all secondary share follow-ons have included stock from insiders. Since 2012, 46 follow-ons have included secondary shares from directors or named management. Key characteristics of these offerings are as follows:
Insider sales typically occur concurrent with primary issuance and/or other sponsor monetization transactions, with the average insider sales representing 18% of the follow-on offering size and 29% of the secondary component of the offering.
On average, insiders held 14% of the company prior to the follow-on, sold 20% of their holdings in the offering and retained 11% of shares outstanding post deal.
CEOs sold stock in 70% of the offerings, CFOs sold stock in 46% of the offerings, and CEOs and CFOs both sold stock in 35% of the offerings.