Let me get this straight. Amazon.com
I'm not going to argue that point. Bezos sold his shares at $73.21 apiece last Friday, filing the Form 4 with the SEC on Wednesday after the market closed. Sure, it bears pointing out that the stock actually opened higher yesterday morning. So apparently it wasn't until the general market sentiment started to head south that folks began to grow appalled that Bezos just pocketed roughly $135 million -- before taxes -- on the sale.
Oh, that dim-witted marketplace, forever the tortoise. Maybe it was the slow-coating hypocrisy of Bezos unloading shares just a week after the company announced a $1 billion buyback. "So the stock is priced attractively enough for Amazon to repurchase," a cynic would counter, "but it's too precious for Bezos to keep?"
There are a few things that need pointing out:
- Bezos still has 99.3 million shares outstanding. Last Friday's sale was actually for less than 2% of his stake.
- Yes, Bezos is that loaded in Amazon currency. You, too, would take a little off the table for diversification's sake.
- As a dot-com executive, option grants are part of the compensation package, so you know he'll be earning even more shares in the future.
- The transaction was part of a Rule 10b5-1 automated trading plan that Bezos adopted earlier, as many stock-rich executives at companies like Google
, Blue Nile (Nasdaq: GOOG) , and EMC (Nasdaq: NILE) have set in motion in recent years. (NYSE: EMC)
So why didn't we see the real headlines yesterday?
- Mr. Market Snips a Ridiculous 5% Haircut After Mr. Amazon sells a 2% Stake
- The Last Time Bezos Sold Stock, Amazon.com Shares Took Off
- Wall Street Is a Slowpoke
I'm not suggesting that you dismiss insider transactions. Insider buying is usually a great sign of internal confidence. It's not foolproof; Sirius
However, insider selling needs to be taken with a grain of salt. Who is selling? How much is being sold? How big a stake will remain? Are future option grants in the cards? There are so many questions, rendering reasonable insider selling -- yes, reasonable -- a nonevent for most companies.
This is a nonevent, ugly haircut notwithstanding.
For more on Amazon.com:
Longtime Fool contributor Rick Munarriz has been shopping online for about as long as Amazon.com has been in business. He does not own shares in any of the companies in this story. He is part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.