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How Active Were 2012’s Worst CEOs in Insider Trades?
Posted by: Dianne Tordillo (IP Logged)
Date: December 20, 2012 11:23PM
Earlier this month, Bloomberg Businessweek published a list of chief executives thought to be the worst in 2012, based off of a list conjured by Dartmouth College professor, Sydney Finkelstein.
Some of the contributing factors that earned the CEOs the stinging label were such things as their companies’ declining stock value, abuse of corporate amenities, careless executive decision-making and unfortunate run-ins with the law, to name a few.
As the reputations of the CEOs dwindled, it seemed, so did the livelihood of the companies they were running. (View the original article on Bloomberg at The Worst CEOs of 2012.)
Because of the fact that Insider trades have such a direct correlation with the ups and downs of the market, as GuruFocus found in its 2010 Insider research series, one cannot help but wonder how often these CEOs participated in their own companies’ insider trading activities.
Recalling the research, GuruFocus writes:
“Insiders as a whole are smart investors of their own companies. They tend to sell more when the market is high, and buy more when the market is low. The aggregated activities of Insiders can serve as a good indicator to locate the market bottoms.”
Below is the list, according to Finkelstein, of the Worst CEOs of 2012:
Brian Dunn, CEO of Best Buy Inc. (BBY)
Year to date, Best Buy’s market value has lost 48.78 percent of its worth. In five years, it lost 76.83 percent of its worth. Selling its highest in 2009, the company’s Insider chart shows that Insiders took advantage of its highest value by selling the most around that time. In more recent years, when the stock’s price undertook a downward trend, was when Insiders were more inclined to purchase shares.
As the company experiences an all-time low this year, there were only five Insider trades reported. Dunn, who resigned from the company in April, was not one of them. His last reported stock trade was in April of 2011. Before that, he sold shares in April of 2010.
Dunn was not an active participator of trading company shares during his time on the company’s executive board.
Aubrey McClendon, CEO of Chesapeake Energy (CHK)
Chesapeake was publicly scrutinized this year when shareholders, including activist investor Carl Icahn, pleaded for a restructuring of the company’s board.
Year to date, Chesapeake’s market value has gone down 21.13 percent. In five years, it has diminished by 54.21 percent.
Interestingly, according to the chart, Insiders were actively buying in 2011, a time when Chesapeake stock was at a high point.
This year, there were only four trades, and CEO McClendon was not one of them.
McClendon was more active in trading in 2011, when he purchase 15,000 shares in March, 10,000 shares in June, 8,600 shares in August and finally, 11,000 shares in November.
Andrea Jung, CEO of Avon Products (AVP)
Year to date, Avon’s market value has declined 15.91 percent. In five years, it has gone down 63.52 percent.
In three years, Avon’s Insider trade activity has appeared pretty dull. No purchases of shares have been reported since 2009.
This year, only one trade occurred from the company’s executive vice president. CEO Jung reported three sells in 2008, one sell in 2009, one sell in 2010, and no sells in both 2011 and 2012.
Mark Pincus, CEO of Zynga (ZNGA)
About a year ago, Zynga declared itself a public company. But since its IPO, Zynga’s stock has declined about 75 percent.
CEO Pincus only traded company shares once thus far, selling 16.5 million shares in April when the stock was on the verge of a significant drop that eventually led to its low today.
Mark Zuckerberg, CEO of Facebook (FB)
Although Facebook’s Zuckerberg didn’t quite make the list as one of this year’s worst CEOs, Professor Finkelstein said he almost did.
As far as the company goes, it is still at its infancy in terms of being publicly traded. It only announced its IPO in May. And based off of several media reports, it was a disaster.
For a while, Facebook was deemed the must-buy stock of the decade – until it lost a big chunk of its value. Today, Facebook’s stock is trading at $27, compared to its opening price of $38 in May.
Zuckerberg has not purchased or sold any of Facebook’s shares since its IPO.
Make sure to check out GuruFocus’ various insider screens, including CEO Buys/Sells, CFO Buys/Sells and Insider Clusters.
To read more about the significance of Insider trades, visit the following GuruFocus articles:
Stocks that Both Gurus and Insiders are Buying
GuruFocus Insider Research: The Summary of Previous Research Results
Can Aggregated Insider Trading Activities Predict the Market?
Can Aggregated Insider Trading Activities Predict the Market of Different Sectors?
Re How Active Were 2012 s Worst CEOs in Insider Trades
Posted by: batbeer2 (IP Logged)
Date: December 21, 2012 08:08AM
>> Zuckerberg has not purchased or sold any of Facebook’s shares since its IPO.
Meanwhile, the IPO itself was probably the largest insider sale of any stock..... ever.
Re How Active Were 2012 s Worst CEOs in Insider Trades
Posted by: vgm (IP Logged)
Date: December 21, 2012 11:54AM
"Meanwhile, the IPO itself was probably the largest insider sale of any stock..... ever."
Absolutely correct! Overt manipulation.