Has anybody else out there noticed that Jeff Bezos, CEO of Amazon.com (NASDAQ: AMZN), recently sold $135 million of his stock? Not to worry, these are his regular 10b5 plan sales that are pre-scheduled with the SEC. Just smart diversification I suppose.
Normally, I would think this is not that big a deal since he owns billions of dollars of the stock as the single largest shareholder. If I were him, I would be selling too, in particular because I have felt that AMZN is overpriced for quite a while. (See Serious Money: AAPL, AMZN, GOOG, ISRG -- at what Price?)
The stock jumped early this month when Amazon announced the retirement of debt and a stock buyback plan over the next two years. This was a temporary affect; the stock has been trading in the low $70's recently, give or take a few bucks.
But what strikes me as curious is that this buyback plan is announced while insider selling has rarely been higher! The buyback and Bezos selling inspired me to look at the latest insider trading. When I checked it out I discovered company directors, officers, and "affiliated persons" have all been sellers and only sellers. To be fair some of the sales are listed as 'planned'; however, the plan does not have to be filed very far in advance, so I am not impressed by this.
The stock buybacks are curious for several reasons: 1) it supports the stock while major insider selling is going on. 2) it implies the stock is cheap, when the selling implies its high in the view of insiders, 3) it means that management does not have a better place to invest and 4) share buybacks generally help create value for insiders holding stock options.
Is it possible that management may be using shareholder money just to prop open the exit door?
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I do not own shares of AMZN.
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Reader Comments (Page 1 of 1)
2-27-2008 @ 8:28PM
Toon said...
This AMZN insider trading is interesting:
http://www.insider-monitor.com/trading/cik1018724.html
4-25-2008 @ 2:37PM
Art said...
I saw the same thing happen with LNCR the end
of 2007