I've noticed heavy insider selling in Dell the last three months according to SEC forms "4" and "144" filed by Dell's Officers and Directors. Is this an ominous sign or are they just taking some profits? Should I be careful jumping in at these levels considering that the "insiders" who have a much more intimate knowledge of Dell than the rest of us are selling? Maybe I just worry too much?
This is just realistic diversification. Remember, Dell is up near 1000% in two years. If you found yourself with a few million dollars in a single stock all of a sudden, and this represented practically *all* of your net worth, wouldn't you divesify by at least 20-30% ?
The problem in diversifying out of this stock is that it goes up in value so fast compared to your lower risk investments that it continually forces its way up to being a large pecentage of your total net worth.
For instance, I've put just as much disposable income into mutual funds and money market instruments as I have into Dell stock but still Dell quickly became 90% of my net worth. I sold off half of my Dell holdings at (split adjusted) $15, 18 months ago, and the remainder has already gone up 500%, driving it back up to where it's a major percentage of my net worth again.
So, if I divest myself of another goodly chunk of this stock am I doing it because I don't have confidence it's a great ongoing investment ? Nope, just falling for the conventional wisdom and putting my eggs into different baskets.
I AM here to tell you that I wish I had never sold a single share of this stock. Thank gawd I only sold half of what I could have at $15.
So, I'd only be worried if I saw insiders selling every share of Dell they owned. Selling 1/3 or 1/2 is not a bad sign.
btmfisher said: > I've noticed heavy insider selling in Dell the last three > months according to SEC forms ....
Very heavy trading could be a problem, but the numbers I saw over on http://www.insidertrader.com/ didn't look particularly heavy to me. I'd guess the insiders can support selling at that rate for many years. Diversification (selling) is normal behaviour for them and they probably diversify (sell) as soon as they can. That's no problem for them, since there's always more vesting and selling next year.
The bad news is that the insiders (except the biggest ones) probably can't sell much faster even if they wanted to; thus it's hard to tell if they're bailing out or just operating normally.
I could be wrong. After all, I'm just guessing like everyone else is.