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Insider selling is never really a good thing, but that doesn't necessarily mean it's a bad thing. After all, there are plenty of entirely understandable reasons for an insider to reduce their stake that have nothing to do with the company's prospects. Maybe it's diversification. Maybe it's estate planning. Maybe daddy just needs a new car.
Two Apple (NASDAQ: AAPL ) execs have recently cashed out some of their holdings. Should investors be worried?
Right on cue
The most recent is Eddy Cue, Apple's head of Internet services and recent heir to both Siri and Apple Maps in the wake of Scott Forstall's departure. At the end of November, Cue sold off 15,000 shares at an average price of about $584 for approximately $8.8 million. After that trade, Cue was left indirectly beneficially owning just 285 shares in a trust.
Before investors jump to the conclusion that he just sold off 98% of his stake in the Mac maker, they should remember that he still has sizable holdings in restricted stock units. For example, last September Cue was the happy recipient of 100,000 RSUs when he was promoted to a senior vice president, reporting directly to CEO Tim Cook.
As of Apple's proxy filed in January, Cook had 267,500 unvested RSUs at the time and 8,800 direct shares. In April, Cue had 6,250 shares vest, of which about 2,750 he surrendered for tax liabilities, while gifting the rest into a trust. A similar transaction occurred in October, except that time he gave up 2,900 shares for Uncle Sam. Cue has cashed out virtually all of the shares held in the trust, but he still has about 255,000 RSUs waiting to be his, which is worth roughly $140 million at current prices.
As Apple's current negotiator with content partners, Cue has an important role. The good news is that he's still very much invested in Apple's future. Nothing to worry about here.
In June, Apple announced that its head of hardware engineering, Bob Mansfield, was retiring. That turned out to be a psych-out, as Mansfield was persuaded to stay onboard by Cook with a hefty $2 million per month offer. Forstall's exit also reportedly helped keep Mansfield around for a little longer. He is now the head of technologies, which now includes all of Apple's wireless teams.
A couple days before Cue's trade, Mansfield disposed of 35,000 shares at an average price of $582.21, bringing in $20.4 million. That left him with approximately 29,500 shares to his name. In March, Mansfield had 120,000 RSUs vest, part of a grant that was given to him in September 2008 but is now fully vested. He surrendered 56,000 shares at the time, so his recent sale represented a little over half of his remaining holdings.
As someone that was recently preparing for retirement and probably still is, this move is likely simple diversification. Mansfield is reportedly only staying for another two years, in part to help transition his responsibilities to his successor Dan Riccio, so his exit is already more or less planned. Maybe he'll even stay retired next time around.
An eager Iger buy
Insider purchases are a little more telling, and it's worth mentioning that Walt Disney (NYSE: DIS ) CEO and Apple director Bob Iger recently went out of his way to pick up a cool $1 million in Apple shares last month. The dollar amount of the trade may be less than the two subsequent insider sales, but an insider buy is an unequivocal vote of confidence, whereas an insider sale can be trickier to decipher.
Iger goes way back with Apple and Steve Jobs, after he helped put together Disney's acquisition of Pixar back in 2006. It was also his call to buy Marvel Entertainment in 2009 and even the Force is now with Disney. I'm still trying to figure out who would win in a fight between Buzz Lightyear, Iron Man, and Anakin Skywalker.
It's been just over a year since Iger was named an Apple director, after which he promptly picked up another $1 million in shares. The sells may total more than the buy, but there's still nothing for investors to be concerned with inside Apple.
There's no doubt that Apple is at the center of technology's largest revolution ever, and that longtime shareholders have been handsomely rewarded with over 1,000% gains. However, there is a debate raging as to whether Apple remains a buy. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on both reasons to buy and reasons to sell Apple, and what opportunities are left for the company (and your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.