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Should You Be Worried That 2 Apple Insiders Are Cashing Out?

Evan Niu, CFA
December 5, 2012

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.