Hewlett Packard Insiders Underwater on Sinking Stock
When insiders sell stock, there must be something wrong. When they buy, they're sending bullish signals because they know something we don't.
I subscribe to the Seinfeld perspective on intuition: The little man inside of you doesn't know all; in fact, there's a better-than-zero chance that your little man is an idiot .
>>Also see : SEC Should Keep Close Eye on HP, Whitman
Everybody likes to dog IPOs. Take Facebook (FB) for example.
Every hysterical non-visionary and his buy-and-hold grandmother warned the stock would tank on lockup expiration. Didn't really happen. In fact, FB went on one hell of a run over the last two weeks -- up roughly 25%.
Lockup-associated or not, you have to understand how insider selling on these stocks rolls.
If you look up insider transactions for just about every big name company (and many small), you'll find selling. Tons of it. And it tends to happen without regard for the direction the stock is headed or the prospects of the company that floats the paper.
Most insiders sell as part of their compensation packages, particularly at relatively young and/or tech companies.
Look at Facebook COO Sheryl Sandberg -- like any other insider, the SEC makes her moves public. She's executing regular automatic sales that she probably doesn't even pay much attention to. It's not like Sandberg logs in to ETrade hemming and hawing over the price she gets for her 169,000 share lot of Facebook.
There's nothing nefarious about her selling. Forget that she still owns like two million shares. That doesn't even matter. She's selling because that's part of the game. Good company, bad company, good IPO, bad IPO -- insiders sell to get rich or, in Sandberg's case, richer. Don't read into it.
By contrast, man a-freaking-live, I hope you didn't take cues from recent insider buying at Hewlett Packard (HPQ) .
Over the last six months, a couple of insiders on HP's board gobbled up shares at prices ranging from approximately $21 to $23.
According to SEC filings , it appears that HP's executive chairman of the board, Raymond Lane picked up nearly 250,000 shares of HPQ in that ballpark over multiple buys.
He's getting crushed.
Another director, Ralph Whitworth, is in even worse shape, though he doesn't feel as much personal pain.
Whitworth runs a "value" fund out of San Diego known as Relational Investors LLC . In other words, he manages money. And he's bullish HPQ. So bullish that he loaded up this past spring adding millions of shares to his fund's allocation.
Consider one of his buys. On May 31, Relational Investors picked up 3,092,158 additional shares of HPQ at an average price of $22.54. That's an investment of $69,697,241.