If Insiders Are Selling, Should You Sell Too?
A handful of stocks landed on the Fast Money trader radar due to unusually large amounts of insider selling.
They are Priceline, Apple and Gap.
This month alone, five Priceline executives have sold 16.7 million shares at a value of nearly $11 million dollars. And more than 83 million shares were sold by Priceline insiders in February.
And the phenomenon isn’t isolated to Priceline. Apple CEO Tim Cook as well as other top executives at Apple have been selling lately. The same is true of Gap .
If insiders are selling, should you be selling too?
In a word, yes – at least according to strategic investors Dennis Gartman. He’s most focused on Priceline. “When you see someone like (executive Chris Soder) reduce his position by 30%, you have to ask yourself, does he know something that I don’t?”
Tim Seymour is also negative. “I’d take chips off the table,” he admits.
But Seymour isn’t bearish because of the insider selling; instead he simply thinks the stocks are overbought. “I don’t think the executives are trading but I also think Priceline is an expensive stock," he says.
“I look at the selling as a flag but not a red flag. Maybe a yellow flag, says Citi analyst Mark Mahaney. But unless you’re a short term trader, Mahaney doesn’t suggest making a move. Looking at Priceline, he likes the fundamentals over the long-term. “I’d stay with a long in Priceline.”
Pete Najarian agrees with Mahaney – that is, he doesn’t see the selling as a reason to turn bearish. “In 2010 Ron Johsnon sold stock Apple stock at $310 – you could have argued at the time that was shocking. As it turned out the stock has doubled since then. I don’t think these guys are trying to pick a top.”
CNBC contributor Ron Insana reminds the desk that executives sell stocks for lots of reasons. "A lot of times executives sell at regular intervals. And sometimes they sell because of divorce or estate planning or some other life changing event."
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Trader disclosure: On Mar 28, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Tim Seymour is long BAC; Tim Seymour is long INTC; Tim Seymour is long SBUX; Tim Seymour is long FCX; Pete Najarian is long AAPL CALLS; Pete Najarian is long AAPL; Pete Najarian is long BAC CALLS; Pete Najarian is long C; Pete Najarian is long JPM CALLS; Pete Najarian is long MS CALLS; Pete Najarian is long INTC; Pete Najarian is long YHOO; Pete Najarian is long SBUX; Pete Najarian is long COP; Pete Najarian is long PEP; Pete Najarian is long HPQ; Pete Najarian is long SCCO
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