[RT] Insiders Selling Stocks at Fastest Pace in 2 Years

["James Taylor" <jptaylor@xxxxxxxxxxxxxxx>]

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<FONT 
size=-2>11/12 11:04Pace of U.S. Executives' Selling at 2-Year High: 
Insider Focus<FONT color=#333333 face="sans-serif, arial" 
size=-1>By Steve Matthews 

New York, Nov. 12 (Bloomberg) -- Executives at U.S. companies, led by 
Microsoft Corp. Chairman Bill Gates and Limited Inc. Chief Executive Leslie 
Wexner, are selling their companies' shares at the fastest pace in more than two 
years. 
The so-called insiders -- executives, directors and big individual investors 
-- made 2.2 sales for every purchase in the past eight weeks, according to 
Vickers Weekly Insider Report. They stepped up sales to the fastest pace since 
June 1998, even as the Dow Jones Industrial Average has fallen 7.8 percent this 
year and the Nasdaq Composite Index has dropped 26 percent. 
The wave of selling comes as corporate profits slowed to the smallest 
increase in more than a year. U.S. companies' earnings rose 18 percent in the 
third quarter, hurt by a slowdown in retail sales, a weaker euro and higher oil 
prices. They are forecast to rise 11 percent in the fourth quarter, according to 
analysts surveyed by First Call/Thomson Financial. 
``These guys are not stupid,'' said money manager Carl Domino, president of 
Northern Trust Value Investors. ``The stock market is still high by historical 
standards. We're seeing a slowdown in the economy. Earnings are at risk for some 
of these companies.'' 
The rise in selling represents a reversal from a year ago. Just last 
November, three purchases were reported for every two sales by officers and 
directors, who are required to disclose their moves to the U.S. Securities and 
Exchange Commission. 
``There's a reliable degree of prescience among insiders,'' said David 
Coleman, editor of the Vickers Weekly Insider Report. ``The market is 
vulnerable. If insiders are looking elsewhere for investment opportunities, a 
rally is not probable.'' 
Even so, the current selling has yet to reach historically high levels, 
analysts said. 
In August 1997, for example, there were more than three sellers for every 
buyer, Coleman said. That rate of selling preceded a 16 percent decline in the 
Dow Jones Industrial Average in the next three months. 
Reasons to Sell 
Executives have many reasons to sell shares -- they're buying a house, 
diversifying investments or feel the stock may have reached a peak. 
Among recent sellers, Microsoft Chairman Gates sold 10 million shares valued 
at $702.4 million in September, according to the Washington Service, which 
tracks filings. Gates has a regular program in which he periodically sells a 
small fraction of his Microsoft holdings to diversify his investments, said 
Caroline Boren, a company spokeswoman. 
Selling has been particularly heavy among computer-related companies and 
software makers, analysts said, reflecting big gains in recent years. The Nasdaq 
index has almost doubled in the past three years, even after recent declines. 
Analysts said that part of the selling reflects computer- related companies' 
practice of compensating executives with stock options rather than cash. 
Even so, ```They understand that their stock prices are high,'' said Domino. 
``The tech stocks are still overvalued -- at prices we wouldn't consider 
buying.'' 
The Nasdaq index trades at 120 times the past year's earnings, or more than 
six times the Dow Jones Industrial Average's multiple of 20. 
Sellers include Brocade Communications Systems Inc. Chief Executive Gregory 
Reyes Jr., who sold 255,900 shares for $54.9 million in August, and Learning 
Tree International Inc. Chairman and Chief Executive David Collins, who sold 
$70.5 million of his stock in the computer training company in September. 
Officials of Brocade couldn't be reached for comment. Collins sold to 
diversify investments, according to a regulatory filing. 
Selling on 'Great Run' 
Officers and directors in energy companies have been among the heaviest 
sellers, analysts said. Their stocks have risen as oil prices increased in the 
past year. 
National-Oilwell Inc. Chief Executive Joel Staff sold 100,000 shares at 
between $35.51 and $35.56 a share, or $3.6 million, in August, according to the 
Washington Service. The stock of the Houston-based company has risen 91 percent 
this year. National- Oilwell executives couldn't be reached for comment. 
``Some of the energy stocks have had such a great run,'' said George Shirk, 
managing editor of The Insiders newsletter in Deerfield Beach, Florida. 
``Insiders are lightening up their positions.'' 
Among others, Limited CEO Wexner sold 3.5 million shares for $81.8 million in 
September, according to the Washington Service. Slowing retail sales have 
prompted declines in retail stocks this year, though Columbus, Ohio-based 
Limited has bucked the trend and risen 19 percent. 
A company official declined to comment and referred questions to Wexner's 
attorney, Raymond Gietz, with Weil, Gotshal & Manges LLP. He couldn't be 
reached. Previously, Gietz has said trusts related to Wexner sell stock 
periodically for estate planning purposes. 
Buying in Banks 
Even with the rise in selling, there's buying in a number of industries 
including gold and metals producers and regional banks. Buying can be a better 
indicator for a stock than selling, because there are many reasons executives 
sell other than a belief the stock may decline, analysts said. 
Among banks, there's been buying at Republic First Bancorp Inc. in 
Philadelphia, CNB Financial Corp. in Clearfield, Pennsylvania, and Florida Banks 
Inc. in Jacksonville, said Shirk. 
``There's only one reason executives buy their shares,'' he said. ``They 
think they are going to make money.'' 
-----------------------
Is the bubble finally ready to burst ?  
and end this 'new' economy ?
I for one, hope so.  Let the panic 
selling begin.
 
 
 
 
 






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