Is it necessarily a bad sign when directors in a company sell their stock.?

Question

Let's say the CEO or other bigshot sells a million shares after the stock has had a good runup. Is that inside selling?

Answer 1

It is usually not a good sign. Generally, it is saying that the director thinks his stock is going down, so he wants to get a good price before it goes down. Or, it is a sign that the director does not have confidence that the stock will stay where it is.

Usually, an insider buying his own stock is a good sign and selling it is not.

For a director to sell his own company's stock he has to register with the SEC and there are rules how soon before and after an announcement he can sell.

I hope the foregoing helps,

Jack

Answer 2

Not necessarily.

Go to yahoo finance and type in the stock symbol, then look at the message boards to see what is being said.. You can also check how much stock is being sold by insiders and how much they hold.

One other thing if this is a low priced stock (under $10) check the performance of the stock and see what it's highs and lows for the past 6 months have been to see whether the stock is being played with for quick profit taking.

This should give you an idea of what is going on.

Good luck.

Answer 3

If it happens once, it may be bad. But usually, if you look, you'll see that it may be the way that person earns a living. Many CEO's take a small (relatively!) salary, and then exercise options regularly to make their "real" money...