U.S. Execs Boost Sales of Company Stock; Microsoft Leads Pack
U.S. executives boosted their stock sales by 26% to a record $36.2 billion in 1998, led for a third consecutive year by Microsoft Corp. officers, but also raised their purchases.
Microsoft director Paul Allen, who co-founded the world’s largest personal computer software maker, led all officers with $3.6 billion in sales. Chairman and Chief Executive Bill Gates sold $1.8 billion in stock as Microsoft’s shares more than doubled, according to research firm Washington Service.
Executives purchased $2.8 billion in shares during the year, a 23% increase. Conseco Inc. officers topped the list of buyers for the second straight year, spending $143.8 million as the insurer’s shares fell by about a third, Washington Service said Thursday.
Buying and selling by insiders proved to be good indicators of where the market headed during the year, analysts said. Officers sold the bulk of their shares in the first half, before the Dow Jones industrial average fell by about one-fifth in the six weeks ended Sept. 1. After that decline, buying by executives picked up before trailing off near year-end.
“These folks are pretty prescient,” said analyst Frank Ponticello, who follows insider trading for Prudential Securities Inc. “Insiders are the quintessential value players.”
Conseco said it encourages officers to buy stock by arranging loans for them. Microsoft said Gates regularly sells shares to diversify his holdings, while a spokesman for Allen’s Vulcan Ventures wasn’t immediately available for comment.
It’s no surprise insiders sold shares, given the Dow’s 18% total return last year, analysts said.
Still, persistent selling doesn’t mean a stock is headed for a fall, because executives have many reasons to sell: to finance a home purchase, for example, or to diversify their investments. Typically, twice as many sales as purchases are reported by insiders, who are required to disclose their moves to the Securities and Exchange Commission, said Bob Gabele, president of insider research firm CDA/Investnet of Rockville, Md.
Buying tends to be a better indicator because insiders usually make purchases because they see their companies as good values, Gabele said.
Insiders at the Redmond, Wash.-based Microsoft sold $5.8 billion in stock during the year, more than twice as much as a year earlier, Washington Service said. The rise in Microsoft stock helped it pass General Electric Co. as the nation’s highest-valued company.
Dell Computer Corp., whose stock more than tripled last year, was No. 2 in selling at $1.5 billion, Washington Service said. Other big sellers included executives at Intel Corp., Gateway Inc. and America Online Inc.
Conseco shares have fallen since the life and health insurer agreed to buy money-losing consumer finance company Green Tree Financial Corp. for $6.5 billion. Yet the acquisition could result in more consistent earnings over the long haul, said money manager John Ray, president of Legacy Asset Management Inc., which owns the shares.
Conseco Chairman and Chief Executive Stephen Hilbert spent $42.7 million on shares of the Carmel, Ind., company.
“It’s a very cheap stock,” Ray said. “Management is buying the stock for their own account aggressively. That tells you something about the value that exists.”
Steel processor Shiloh Industries Inc. ranked No. 2 in purchases with $60 million. Other big buyers were found at CCC Information Services Inc., which processes claims for auto insurers, investment firm PEC Israel Economic Corp., Irvine-based sunglasses maker Oakley Inc. and aluminum can company Ball Corp.
