Should You Be Concerned That These Facebook, Inc. Insiders Are Selling?

Not all sales are created equal. A Fool looks at the disclosures and deciphers the details behind a pair of recent transactions by Facebook Inc. insiders.

Mar 13, 2014 at 7:30PM

A pair of recent sales by Facebook (NASDAQ:FB) insiders aren't as troubling as they might seem, Fool  contributor Tim Beyers says in the following video.

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Be sure to read the fine print when examining insider buying and selling.  Source: Tim Beyers/The Motley Fool.

Investors don't typically want to see insiders selling on the open market, which is what we had here. Chief Financial Officer David Ebersman sold a total of 23,400 shares between $69.70 a share and $71.85 a share for a rich payday of more than $1.6 million.

Chief Accounting Officer Jas Athwal sold a more modest 3,000 shares at an average price of $66.88 apiece for a bit more than $200,000 in pre-tax proceeds. Yet both did well, especially when you consider that, only a year ago, Facebook shares were trading for just about $27 each.

So are they selling at the top? Hardly. Both executives still hold hundreds of thousands of shares. They also sold under the purview of a 10b5-1 trading plan, which means they controlled neither the timing nor the prices at which they sold.

If there's a reason to be concerned about Facebook, it's increasing competition or advertising dollars from not just Google but also Yahoo!, which is taking deliberate steps to cut out middlemen like Facebook and get closer to users.

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Investors should always want those representing their interests to have as much (or more!) to gain from a rising stock price, which is why Facebook's insider sales aren't nearly so bad as it seems. In fact, we believe in this principle so strongly that we're allowing our Chief Technology Officer, Jeremy Phillips, to put more than $100,000 of his own money in a company that Fool co-founder Tom Gardner calls it "the one everlasting investment" to make -- even if you never buy another stock. To learn this company's identity for free and see why Jeremy and Tom believe in it so strongly, all you have to do is click here now.

Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Google at the time of publication. Check out Tim's web home and portfolio holdings or connect with him on Google+Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool recommends Yahoo! It recommends and owns shares of Facebook and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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