Bloomberg has a very interesting
report on why they believe Google’s stock has been falling this year, down
about 7 percent this year. They say that Google’s executives have sold off a
boatload of stock since the IPO.
"Google’s top executives have offloaded about $7.4 billion of stock, equal to
about a third of the company’s starting market value when it sold shares at $85
each in the August 2004 IPO," says Bloomberg columnist, Mark Gilbert. Not only
that, he reports "not a single Google insider has bought a single share of the
company in the 18 months since the IPO lock-ups expired." Can you believe that!
Postscript From Danny: It’s worth noting that at least to me, the idea
that the insiders are selling their stock and not buying is unsurprising.
They’ve got a lot of stock. A lot of stock!
Buying some shares would probably be a good PR move, and after an article
like this one, I can imagine some of the execs might start doing it. But the
point of selling, as the article itself notes, is to diversify portfolios that,
for these execs, are ironically unhealthily skewed toward Google.
For the curious, there are various places to see insider sales over times.
Yahoo has a nice list here.
Note how entries for Eric Schmidt and many others are tagged "automatic." That
because, to my knowledge, they have preplanned to diversify their portfolios by
selling shares automatically over time. That protects them against accusations
of insider sales.
Also interesting are entries like exec Omid Kordestani acquiring 76,459
shares on June 12, 2006. Didn’t the Bloomberg article say no big Googlers were
buying? Yes — so what’s this? I assume that Googlers might still be gaining
shares in other ways, which adds further understanding as to why they might not
be buying on the open market.
Finally, it’s no surprise that that over the past 18 months that neither
founders Larry Page or Sergey Brin have been selling. That’s because they
already said in 2004 that they’d spend the next 18 months diversifying their
portfolios through planned sales.
Overall, insider trades are definitely interesting to watch, and I’m sure
Google will take a PR black eye over the apparent lack of purchases. But I think
there are factors that don’t make it as bad as it seems.