by fnnewz
High-profile CEOs, founders and heirs are selling shares by the bucketload in the companies that made them billionaires. For almost the entire group, share prices are trading near all-time highs.
Jeff Bezos sold $8.5 billion worth of Amazon stock in multiple transactions this month. Meanwhile, Jamie Dimon, CEO and chairman of JPMorgan Chase, sold $150 million in stock last week, his first cash out since he took the top job at the bank 18 years ago. Around the same time, Leon Black, co-founder and former CEO of Apollo Global Management, dumped $172.8 million in stock, also the first stock sale in history.
In dozens of trades since early February, Mark Zuckerberg dumped about 1.4 million Meta shares worth about $638 million, according to an analysis by stock sales insider trading firm Verity. This latest batch of sales came after previously dumping 588,200 shares in November, 688,400 in December, and 447,200 in January. He sold nearly $600 million in the three months to February and his combined sales revenue over the past four months reached $1.2 billion.
Similarly, the trust of the Walton family, heirs of Walmart’s founder, sold $1.5 billion in Walmart stock this month. The family owns about 45% of Walmart shares, according to Bloomberg.
Many of the sales were made in accordance with 10b5-1 business plans that executives established late last year and early this year. These trading plans are created in advance so that a broker automatically sells the stock on a specific date or when the stock reaches a certain price. They are set to activate at a time when the executive does not possess material non-public information that could potentially move the stock price and provide the executive with a defense against potential insider trading charges by regulators.
The selling comes as the S&P 500 index is at an all-time high, up 28% in the past year. The Nasdaq Composite Index rose nearly 40% last year.
Apollo Global Management’s Black was the group’s only founder to sell outside of a 10b5-1 trading plan. His spokeswoman said the exchange was made as part of routine tax and estate planning and to fuel the growth of his family office, Elysium Management. The Walton family sales were also outside the 10b5-1 plan. A 2015 statement from the Walton family said its members will sell shares from time to time to slow the rise of their ownership of the retail giant. The Waltons created the trust that same year and told Walmart that it had no set schedule for sales of the company’s stock.
The calm before the storm
Alan Johnson, a compensation consultant who works with financial services firms, said the stock selling could be due to the fact that the election could shake things up in the fall. Therefore, if an executive currently has “more money” than he expected, diversifying his holdings is a good idea. Additionally, wealthy shareholders may be taking advantage of tax breaks implemented during the Trump administration, Johnson noted, in case they are eliminated under any new administration or Congress after the next election.
“If you read the tea leaves and look at what may happen with our politics in the next year, things are pretty good right now: markets are up,” said Johnson, president of Johnson Associates. “With our politics and everything else going on geopolitically, it might not be as good in a year or two years.”
As for Dimon, Johnson said the bank’s CEO is known for holding shares in the company, a tactic that has made him rich. Dimon’s net worth according to Forbes is $2.1 billion.
“The way he, of course, became fabulously rich was by getting the shares, holding them and driving the share price up,” Johnson said. “The unusual thing about him selling is that he does it at a very late stage in his career.”
Most executives would have sold moderate amounts along the way, he explained. That doesn’t necessarily mean Dimon’s tenure at the bank has an end date, Johnson said.
“A joke I’ve used with clients is that, looking back 10 years from now, one of the questions we’ll ask is, ‘Who will replace Jamie Dimon at JPMorgan?’” he said. “We’ve been asking ourselves that question for 10 years now.”
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