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When directors of a company buy or sell shares

June 17, 2024
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SKIN IN THE GAME Directors dealings, what does it mean?

What does it mean when directors SELL shares?

Directors can sell shares for many reasons, so it does not mean something specifically.

Reasons include:

  • Personal reasons - When directors need funding for personal reasons, such as building a house, buying a new Ferrari or general cash flow
  • When they want to make new Investments- For example, Jeff Bezos selling Amazon shares in order to fund Blue Origin.
  • Tax reasons
  • When the directors think that the shares are overvalued. (Not good)

We saw many directors of high growth tech companies selling stock at the highs last year.

 

What does it mean when directors BUY shares?

One MAIN reason, they personally believe that the companys share price has room to grow.

 

Conclusion

It is not motivating to see that a director of a company that you own sell their own shares, but it is important to note, that it does not mean one thing specifically.

On the other hand, it is really motivating when you see a director buy shares in their own company.

As a shareholder, you want to see that the team has skin in the game!


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