In this edition of The Motley Fool's "Ask a Fool" series, Motley Fool analysts Jason Moser and Brendan Mathews take a question from a reader who asks, "Mr. Bassoul [CEO of Middleby] has made large sales of his stock in 2013 and 2014. Should I be concerned about this?"
Peter Lynch has said that there are many reasons for insiders to sell, and only one reason to buy. The bottom line is that, while we like to see insiders owning shares in their companies, they are investors, too, and must also worry about portfolio diversification. In the case of Selim Bassoul, Jason mentions that they were fortunate enough to speak with him recently and ask him this question directly. Mr. Bassoul explained that these sales were part of a 10b-5 plan, which is a pre-arranged stock-sale program. Mr. Bassoul used this program to exercise some options that were getting ready to expire, as well as diversify his and his family's interests; but they still hold a considerable stake in the company.
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