Does the fact that a CEO accelerates sales of stocks of his company mean anything?

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Post Reply
User avatar
Topic Author
steve321
Posts: 715
Joined: Sat Sep 09, 2017 9:16 am
Location: Southampton, UK

Does the fact that a CEO accelerates sales of stocks of his company mean anything?

Post by steve321 »

I hold a substantial amount of Amazon stock. Now I've learnt that Jeff Bezos has sold more stocks in Amazon this year than in previous years:

https://www.cnbc.com/2020/11/04/bezos-s ... ares-.html

The piece says this is part of a 10b5-1 trading plan but I don't know how much in advance that plan has to be formulated? In any case does a sale like this signal something? Would it be right to conclude that if a smart person like Bezos is selling, it's probably a signal that there's a greater chance of a bear market coming? Or in any case of Amazon stock going down in price?
Success does not bring happiness. In fact, happiness IS success. | 'There are only two tragedies in life: one is not getting what one wants, and the other is getting it.' Oscar Wilde
User avatar
jfn111
Posts: 1226
Joined: Fri Nov 08, 2013 10:42 pm
Location: Minnesota

Re: Does the fact that a CEO accelerates sales of stocks of his company mean anything?

Post by jfn111 »

Bezos has other investments, like Blue Origin, that burn through a lot of cash. It also might be a bit of a tax hedge to bulk up his cash reserves now in case rates go higher in the future.
User avatar
bertilak
Posts: 8067
Joined: Tue Aug 02, 2011 5:23 pm
Location: East of the Pecos, West of the Mississippi

Re: Does the fact that a CEO accelerates sales of stocks of his company mean anything?

Post by bertilak »

Maybe he wants to buy a sports team.

Or a small country. :happy
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker (aka S.O.B.), the Cowboy Poet
alex_686
Posts: 7480
Joined: Mon Feb 09, 2015 2:39 pm

Re: Does the fact that a CEO accelerates sales of stocks of his company mean anything?

Post by alex_686 »

CEOs buying stocks is a good thing.

Selling stocks could mean anything. I an sure that Mr. Bezos has a non-diversified portfolio.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
User avatar
Brianmcg321
Posts: 1183
Joined: Mon Jul 15, 2019 8:23 am

Re: Does the fact that a CEO accelerates sales of stocks of his company mean anything?

Post by Brianmcg321 »

Maybe he became a boglehead and is merely trying to get out of a sinlgle stock and put it all in VTSAX.
Rules to investing: | 1. Don't lose money. | 2. Don't forget rule number 1.
User avatar
SquawkIdent
Posts: 586
Joined: Tue Dec 23, 2008 7:14 pm
Location: Planet Earth

Re: Does the fact that a CEO accelerates sales of stocks of his company mean anything?

Post by SquawkIdent »

Just like you and me he needs liquid cash for his needs. Whether it be to make other investments, buy property, charity or just walking around money. He still owns a tremendous amount of stock, so I really wouldn’t worry about it.

More importantly, what do you think about the company and it’s future?

Good luck and congrats on owning an incredible company. It seems like only yesterday there were only an online bookstore.
flyingcows
Posts: 191
Joined: Sat Apr 20, 2019 8:13 am

Re: Does the fact that a CEO accelerates sales of stocks of his company mean anything?

Post by flyingcows »

Bezos is only paid 80k a year in cash from Amazon. All of his wealth comes from his initial ownership stake and he has been divesting of that consistently for years. He spends atleast 1 billion a year on his rocket company, among other things
bugleheadd
Posts: 496
Joined: Fri Nov 29, 2019 11:25 am

Re: Does the fact that a CEO accelerates sales of stocks of his company mean anything?

Post by bugleheadd »

That's chump change to him.

It's like me withdrawing a few 20 dollar bills from the atm
User avatar
JoeRetire
Posts: 6631
Joined: Tue Jan 16, 2018 2:44 pm

Re: Does the fact that a CEO accelerates sales of stocks of his company mean anything?

Post by JoeRetire »

steve321 wrote: Sat Nov 07, 2020 4:52 amIn any case does a sale like this signal something?
It signals that Bezos decided now was a good time to sell some of his stocks. Nothing more.
Would it be right to conclude that if a smart person like Bezos is selling, it's probably a signal that there's a greater chance of a bear market coming?
No, that conclusion would be foolish. Many smart people sell occasionally. Just as many smart people buy.
Or in any case of Amazon stock going down in price?
The price may go down. It may go up.
It's the end of the world as we know it. | It's the end of the world as we know it. | It's the end of the world as we know it. | And I feel fine.
ModifiedDuration
Posts: 192
Joined: Sat Dec 05, 2015 4:33 pm

Re: Does the fact that a CEO accelerates sales of stocks of his company mean anything?

Post by ModifiedDuration »

There is no useful information provided, since Bezos is under a 10b5-1 plan.

A 10b5-1 plan would have had to have been set-up late last year. At that point, he would have determined what he wants sold in the following year at either a specific price or what he wants sold at a specific date.

Therefore, he cannot make any decisions this year to impact this year’s trading activity.
Last edited by ModifiedDuration on Sat Nov 07, 2020 11:20 am, edited 2 times in total.
MathWizard
Posts: 4530
Joined: Tue Jul 26, 2011 1:35 pm

Re: Does the fact that a CEO accelerates sales of stocks of his company mean anything?

Post by MathWizard »

I don't think that his selling provides any information. The 105b-1 rule requires that the plan be made without material non public information.

What is material could be a matter of debate, but certainly anything where major amounts of money could be made through options would qualify.

I'm not sure what you would do with such information. Are you planning to short Amazon?
z3r0c00l
Posts: 2008
Joined: Fri Jul 06, 2012 11:43 am
Location: NYC
Contact:

Re: Does the fact that a CEO accelerates sales of stocks of his company mean anything?

Post by z3r0c00l »

He has also made some tentative hints at philanthropy, being the nominally richest person in history and all that. He could sell 10 billion a year for more than a decade and still have plenty left in the company. But maybe there is some wisdom in what he is doing and you might consider also selling some as focusing on one stock seems risky and this one has gone to 1.7 trillion market cap. Not sure how much world there is left for them to dominate.
User avatar
nisiprius
Advisory Board
Posts: 42559
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Re: Does the fact that a CEO accelerates sales of stocks of his company mean anything?

Post by nisiprius »

You say "now I learn." Indeed.

Even with public information, the people who decided how much to pay for the stock Bezos is selling surely learned about it before you did. First, there were the filings; then they were picked up by "OpenInsider;" then Annie Palmer of CNBC picked it up from OpenInsider; then you read or heard it from CNBC.

From OpenInsider I see that the filing was made on 11/4/2020, and you posted on 11/7/2020, three days later.

There may be big institutional investors who can benefit from knowing this, but it so they need to know it a lot sooner than you; or, to turn it around, if you seriously want to make use of this kind of information, you need to figure out how you can learn about it a lot sooner than you have been.

Otherwise--three days after the fact--this is just something like celebrity gossip. Tune out the noise. Let the big institutional investors decide how much the stock is worth. They may get it wrong, but you aren't going to get it righter looking at information three days after they've already seen it.

I once read an interview with a car salesman who said "I sell three cars a day. You buy one car every three years. Do you really think you are going to get the better of a deal with me?"
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
User avatar
Cycle
Posts: 1770
Joined: Sun May 28, 2017 7:57 pm
Location: Minneapolis

Re: Does the fact that a CEO accelerates sales of stocks of his company mean anything?

Post by Cycle »

Jeff Bezos has said Amazon likely won't exist as a company in 100 years. This is because large companies can't easily shift to new realities like smaller ones can and 100 years is an incredibly in long time.

If he actually believes that it makes a lot of sense to sell some stock every year. Is he selling more shares or has the value of the shares he's selling simply gone up?

We might just be printing what we need at home and all living off UBI generously granted by our robot overlords
Never look back unless you are planning to go that way
User avatar
Topic Author
steve321
Posts: 715
Joined: Sat Sep 09, 2017 9:16 am
Location: Southampton, UK

Re: Does the fact that a CEO accelerates sales of stocks of his company mean anything?

Post by steve321 »

MathWizard wrote: Sat Nov 07, 2020 8:41 am
I'm not sure what you would do with such information. Are you planning to short Amazon?
See OP, I own Amazon stocks
Success does not bring happiness. In fact, happiness IS success. | 'There are only two tragedies in life: one is not getting what one wants, and the other is getting it.' Oscar Wilde
Impatience
Posts: 270
Joined: Thu Jul 23, 2020 3:15 pm

Re: Does the fact that a CEO accelerates sales of stocks of his company mean anything?

Post by Impatience »

It’s impossible to say. It could mean the company is heading for failure - or it could just as easily mean it’s going to keep doing great but the seller simply needs to diversify. Or maybe they foresee a great future but still think the stock is overvalued at the moment.

Most likely he is just diversifying his investments. He’s the richest man in the world but investing 101 still applies to him (maybe it applies more).
jello_nailer
Posts: 347
Joined: Sun Apr 07, 2019 10:20 pm

Re: Does the fact that a CEO accelerates sales of stocks of his company mean anything?

Post by jello_nailer »

I think he is raising cash to buy Mar-a-Largo.
User avatar
Topic Author
steve321
Posts: 715
Joined: Sat Sep 09, 2017 9:16 am
Location: Southampton, UK

Re: Does the fact that a CEO accelerates sales of stocks of his company mean anything?

Post by steve321 »

jello_nailer wrote: Sat Nov 07, 2020 12:21 pm I think he is raising cash to buy Mar-a-Largo.
Nah, why would he want to downgrade?
Success does not bring happiness. In fact, happiness IS success. | 'There are only two tragedies in life: one is not getting what one wants, and the other is getting it.' Oscar Wilde
jello_nailer
Posts: 347
Joined: Sun Apr 07, 2019 10:20 pm

Re: Does the fact that a CEO accelerates sales of stocks of his company mean anything?

Post by jello_nailer »

steve321 wrote: Sat Nov 07, 2020 12:25 pm
jello_nailer wrote: Sat Nov 07, 2020 12:21 pm I think he is raising cash to buy Mar-a-Largo.
Nah, why would he want to downgrade?
Not to live there, to bulldoze it down... because he can.

Probably a good location for a space craft launch site.
User avatar
Topic Author
steve321
Posts: 715
Joined: Sat Sep 09, 2017 9:16 am
Location: Southampton, UK

Re: Does the fact that a CEO accelerates sales of stocks of his company mean anything?

Post by steve321 »

jello_nailer wrote: Sat Nov 07, 2020 12:27 pm
steve321 wrote: Sat Nov 07, 2020 12:25 pm
jello_nailer wrote: Sat Nov 07, 2020 12:21 pm I think he is raising cash to buy Mar-a-Largo.
Nah, why would he want to downgrade?
Not to live there, to bulldoze it down... because he can.

Probably a good location for a space craft launch site.
:D good point :D :D
Success does not bring happiness. In fact, happiness IS success. | 'There are only two tragedies in life: one is not getting what one wants, and the other is getting it.' Oscar Wilde
quantAndHold
Posts: 5174
Joined: Thu Sep 17, 2015 10:39 pm

Re: Does the fact that a CEO accelerates sales of stocks of his company mean anything?

Post by quantAndHold »

Back to the topic, execs whose income and assets are primarily in their own stock have to sell stock. Besides the general need to diversify (his asset allocation is like 99.9995% AMZN), he may want the bucks to buy another company as a personal investment, or to buy a private island or yet another fleet of rocket ships.

The interesting thing to watch for is when execs *buy* shares of their own companies. That’s a buy signal for everyone else. Selling, though, ain’t no thing...
Yes, I’m really that pedantic.
rockstar
Posts: 1139
Joined: Mon Feb 03, 2020 6:51 pm

Re: Does the fact that a CEO accelerates sales of stocks of his company mean anything?

Post by rockstar »

steve321 wrote: Sat Nov 07, 2020 4:52 am I hold a substantial amount of Amazon stock. Now I've learnt that Jeff Bezos has sold more stocks in Amazon this year than in previous years:

https://www.cnbc.com/2020/11/04/bezos-s ... ares-.html

The piece says this is part of a 10b5-1 trading plan but I don't know how much in advance that plan has to be formulated? In any case does a sale like this signal something? Would it be right to conclude that if a smart person like Bezos is selling, it's probably a signal that there's a greater chance of a bear market coming? Or in any case of Amazon stock going down in price?
He's always selling stock. And Amazon isn't going anywhere.
jello_nailer
Posts: 347
Joined: Sun Apr 07, 2019 10:20 pm

Re: Does the fact that a CEO accelerates sales of stocks of his company mean anything?

Post by jello_nailer »

quantAndHold wrote: Sat Nov 07, 2020 12:44 pm
The interesting thing to watch for is when execs *buy* shares of their own companies. That’s a buy signal for everyone else. Selling, though, ain’t no thing...
^ This. When the MacDaddy insider is buying that's generally a pretty strong buy signal. There are only a couple of reasons to buy, and tons of reasons to sell.
boosnark
Posts: 56
Joined: Thu Oct 08, 2020 8:31 am

Re: Does the fact that a CEO accelerates sales of stocks of his company mean anything?

Post by boosnark »

It depends on the company. It may mean something, usually after the fact. As in the case of Enron.
youngpleb
Posts: 331
Joined: Mon Oct 16, 2017 7:06 pm

Re: Does the fact that a CEO accelerates sales of stocks of his company mean anything?

Post by youngpleb »

He’s probably just being a good investor and seeking to diversify from his billions and billions of Amazon stock I’d imagine. I know I would!
Post Reply