Peter Thiel, Jeff Bezos and Mark Zuckerberg are leading a parade of corporate insiders who have sold hundreds of millions of dollars of their companies' shares this quarter, in a signal that recent stock market exuberance could be peaking.

As markets hit record highs, the ratio of corporate insider selling to insider buying is at the highest level since the first quarter of 2021, according to Verity LLC, which tracks insider trading disclosures.

Stock sales at the beginning of a calendar year are normal, with pent up demand in early 2024 being exacerbated by shareholders avoiding sales last year because of depressed company valuations.

But analysts still said this season's spree has been surprising and an indicator that a recent tech bull run, fuelled by excitement over the rise of generative artificial intelligence, is about to wane.

"If they think that we're at the top and so they're getting out, that's a rather stark signal to everyone else," said Charles Elson, a legal veteran and chair of corporate governance at the University of Delaware.

Many of the biggest sales this quarter have come from technology executives. Thiel, co-founder of data analytics group Palantir, sold $175mn this month, according to regulatory disclosures, his biggest sale since offloading $504.8mn of the company's stock in February 2021.

Amazon founder Bezos sold 50mn shares worth $8.5bn in the ecommerce group in February. Andy Jassy, Amazon's chief executive, sold $21.1mn of stock this year, compared to $23.6mn in 2023 and 2022 combined.

Zuckerberg, Meta's chief executive, has sold millions of dollars of the company's shares for years. But he has increased selling this year as its stock hit all-time highs. In early February, he sold 291,000 shares for $135mn, his first sale of that size since November 2021. He still has 13.5 per cent of the company's outstanding shares, which makes him its largest shareholder.


"We do view [corporate insider share sales] as a negative data point that investors should be aware of," said Ben Silverman, Verity's vice-president of research.

He added that within the technology sector specifically, "we are also seeing a number of the big [company] names in this space with insider selling that is not typical".

"Clearly there's an appetite for liquidity generation right now," Silverman said. "Some of that is some pent-up demand following relatively quiet insider selling in 2022 and 2023, and certainly one impetus is [stock] market performance."

In one notable case, Snowflake's Frank Slootman sold $69.2mn in early February, weeks before he announced he would step down as CEO. The database software company's shares are down about 29 per cent since the day he announced his retirement. Slootman was not a founder of Snowflake but was brought in 2019 to take it public.

"Insider sales by high-level execs of large amounts of stock are never a good sign, it's quite simple," said Elson from the University of Delaware. "It means they have found a better place to deploy their assets than the businesses they're running."
Source link