Stock Sales by Insiders Jump 20% in 2004

Executives and directors at U.S. companies sold $51.3 billion of shares in their companies last year, the largest amount since 2000, when shares of Internet-related companies plunged.

Microsoft Corp. Chairman Bill Gates topped the 2004 list.

Sales by so-called insiders rose 20% through Dec. 24, while purchases rose 13% to $2.11 billion, according to the Washington Service, which tracks Securities and Exchange Commission filings. Gates sold more than $1 billion in stock, as did executives of Dell Inc. and Oracle Corp.

The pace of selling picked up as stocks surged in the fourth quarter, with November’s sales the highest since August 2000, according to Thomson Financial. Executives may be concerned about the prospect for slowing earnings growth in 2005 as the Federal Reserve raises interest rates.

“CEOs are not enthusiastic about company shares,” said Michael Painchaud, director of research for Seattle-based Market Profile Theorems. “The attitude of insiders can give clues as to the shape of the year ahead. The clues don’t look good for equities in 2005.”

In November, insiders sold $46 in stock for every $1 purchase, reflecting “very bearish” sentiment, said Lon Gerber, director of insider research for Thomson Financial.

Some investors say purchases by executives and directors may be a better indicator of a stock’s prospects than insider sales. Insiders have many ways to use their money, and buying shares is seen as a sign of confidence. Insiders tend to sell for all sorts of reasons -- to buy a house or to diversify investments, or because they suspect the stock is near its peak.

Gates, the world’s richest man, sold 81.8 million Microsoft shares for $2.21 billion. Gates has a program in which he periodically sells shares to diversify his investments, spokeswoman Rachel Wayne said. Shares of Redmond, Wash.-based Microsoft fell 2.2% in 2004.