Keeping a watchful eye on insider selling and insider buying can provide investors with strong clues into a company's, and ultimately a stock's, performance. While insider selling occurs routinely, sometimes it can be a red flag, as we now know was the case recently with Zynga (NASDAQ:ZNGA) whose insiders sold well ahead of an awful quarterly report. Thus, I examined insider selling in the Q3 of Apple (NASDAQ:AAPL), a weak quarter, and Q2 2012, which was a knockout quarter, to quantify the level of insider selling over the first half of the year.
According to the documentation on file with the S.E.C, In Q3 2012, insiders sold 118,678 shares. The following are the details of the Q3 selling:
- Betsy Rafael, VP, Corporate Controller, sold 2,954 shares on May 9th
- Arthur Levinson, Director, sold 7,500 shares on May 8th
- Millard Drexler, Director, sold 40,000 shares on April 27th
- Scott Forstall, Senior Vice President, sold 64,151 shares on April 27th
- Jeffrey Williams, Senior Vice President, sold 4,073 shares on April 16th
To determine if this selling was in anyway unusual for the company, I then examined S.E.C. documentation for Q2. For Q2 2012, in which apple obliterated the estimates, insiders sold nearly three times the shares compared to Q3. Insiders sold a total 312,616 shares in Q2. Here are the details of the selling:
- Phillip Schiller, Senior Vice President, sold 64,151 shares on March 26th
- Peter Oppenheimer, Senior Vice President and CFO, sold 80,147 shares on March 26th
- Timothy Cook, CEO,sold 106,640 shares on March 26th, and sold 20,178 shares on March 12th
- Arthur Levinson, Director, sold 10,000 shares on February 14th
- Robert Mansfield, Senior Vice President, sold 30,000 shares on January 30th
- Jeffrey Williams, Senior Vice President, sold 1,500 shares on January 3rd
Thus far in 2012, insiders have sold a total of 431,294 shares. Comparing Q3 to Q2, the volume of insider selling decreased 62 percent. The decreased insider selling may be a signal that insiders believe the stock is heading higher, and may be waiting for a higher share price to profit from share sales. Investors may take this as a signal to buy the stock into future quarterly earnings reports. I am waiting for a pullback to $600, and if we get it, I'm pulling the trigger and doing some buying.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in AAPL over the next 72 hours.