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The Difficulty in Handicapping Insider Selling



Editor's Note: Minyanville is a community of people who share an interest in fiscal literacy. As perspective is an important aspect of our daily routine, we share this email with hopes that it adds balance to your process.


I owned a bunch of Gap (GPS) puts which I luckily (and I mean luckily) sold last Thursday. Anyway, I'm looking to get back in, especially if this takeover thing is truly just rumor. Anyway, I've noticed a fair amount of insider selling going on for weeks from the Fisher family. Granted, they still own a lot but it's odd to me that they and the rest of the board authorized additional share repurchases and they kept selling shares. What is your gut with what's going on?

Thanks. Your stuff is always very insightful and I look forward to hearing you at MiM2.

Minyan Wendy


The Fisher family (only one is an executive) began selling in earnest more than a year ago. This could be for many reasons; they claim it is for charitable interests. So if they have especially picked up some selling recently, I don't know what we can read into that. It is more useful to track insider selling when a "diverse" group of insiders begin to sell.

It is difficult for me to handicap these types of things, per my comments earlier. Although I do not think an LBO in many of these situations makes long term economic sense, that doesn't stop them from happening. It is all a function of liquidity forcing people to take more risk. Scott's main thesis is that enough is enough and soon, because of high debt, the velocity of money will slow to the point that people take less risk.

So I may be the last person you want to ask.

Prof. Succo

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