Corporate insiders including Amazon boss Jeff Bezos and Google co-founder Sergey Brin have ramped up stock sales recently, cashing in on a 14-month-long bull market that has helped boost fortunes by the trillions.
US public company insiders offloaded shares worth US$24.4 billion (S$32.5 billion) this year through the first week of this month, with about half sold through trading plans, according to data compiled by Bloomberg. That is almost as much as the US$30 billion total they disposed of in the second half of last year.
Large shareholders sell stock frequently at planned intervals, often through pre-arranged trading programmes. Yet the prolonged rally in equities markets has made the value of these disposals, whether planned or opportunistic, strikingly high.
There are multiple reasons an investor of any size might be motivated to sell. After the pandemic-defying rally, valuations are increasingly under pressure from rising inflation. Investors are wary that the post-Covid-19 recovery could prompt tightening measures from the Federal Reserve. And President Joe Biden’s proposed tax hikes – including a near doubling of the capital gains rate – have created uncertainty.
Whatever the reason, the sales are flooding the market with yet more liquidity, the consequences of which will ripple through philanthropy, the art market, real estate and other niches.
Mr Bezos has sold US$6.7 billion worth of Amazon shares this year. While a relative pittance for the world’s richest person, it is more than two-thirds the value of shares he sold last year. Mr Larry Ellison unloaded seven million Oracle shares this month for total proceeds of US$552.3 million. Mr Charles Schwab has sold US$192 million worth of shares of his eponymous brokerage this year.
Mr Brin, who has signalled that he intends to sell as many as 250,000 Alphabet shares, has disposed of US$163 million worth of stock in recent days, his first sales in more than four years, filings show.
Mr Mark Zuckerberg and his charitable foundation, the Chan Zuckerberg Initiative, meanwhile, accelerated their sales of Facebook stock. Mr Zuckerberg or his charity has divested shares at a near-daily clip since last November, for a cumulative total exceeding US$1.87 billion.
The surging markets have exacerbated the concentration risk of the single-stock-dominated fortunes typical of tech billionaires, said Papamarkou Wellner Asset Management president Thorne Perkin. “From a portfolio management perspective, it makes sense to spread it around.”
Also among the biggest sellers are some noteworthy beneficiaries of the pandemic economy. Zoom Video Communications founder Eric Yuan and used-car retailer Carvana’s Ernest Garcia II have together received more than US$1.75 billion from stock sales since March last year, according to the Bloomberg Billionaires Index. Cyber-security firm CrowdStrike’s chief executive George Kurtz has sold shares worth at least US$250 million over that period.
Zoom’s Mr Yuan – the poster child, in many ways, for the coronavirus economy – has stepped up his sales as the firm’s share price slumped. Last year, he typically offloaded about 140,000 shares a month through a trading plan, which generated more than US$350 million over the course of the year.
Since March, he has sold almost 200,000 shares a month on average, yielding him about US$185 million. He also donated more than a third of his stake in the San Jose-based company as part of “typical estate planning practices”, according to a spokesman. Some of the cash from his share sales fund donations to unspecified “humanitarian causes”.