Should You Follow Eric Schmidt and Sell Google Inc (GOOG) Shares?

Page 1 of 3

In a recent SEC report, it was officially announced that Google Inc (NASDAQ:GOOG)’s ex-CEO, Eric Schmidt would be selling over a third (nearly 42%) of his total equity share in Google.

“On November 15, 2012, Eric E. Schmidt, Google Inc (NASDAQ:GOOG)’s Executive Chairman of the Board of Directors, adopted a stock trading plan in accordance with the guidelines specified in Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, and Google’s Policy Against Insider Trading. In February 2013, sales of Eric’s Google Inc (NASDAQ:GOOG) stock may commence under this trading plan.”

We are talking about the 10b5-1 trading plan here that allows a company insider to buy or sell company stocks at the time of non-possession of material non-public information (MNPI). The 10b5-1 trading plan basically maintains that insider stock transactions should not affect the stock market positively or negatively. That is why the plan commences well after the announcement of the Q4F12 and FY12 last month.

Google Inc (NASDAQ:GOOG)But what actually bothers me? There is a loophole in the plan. What if a person already is in possession of MNPI while adopting the trading plan? You might already know some “insider secrets” as early as in November last year and just wait a couple of months to sell out so that the innocent outsiders do not get any hint. A little more research opens up something even more disturbing.

The total number of insider purchases has been far lower than the total number of insider sales. Why is so? Is there anything brewing underneath? Is it a matter of shifting risks on each other’s shoulders?

Even SergeyBrin, one of the internet giant’s co-founders, has been actively divesting his shares at a steady rate, as it seems from the image below.


When the founders are selling stakes in the company, you have to look up and notice. Does this prove anything though? No. To know what might be going on inside, we have to peer through the “open windows” – the company press releases.

Digging Deeper Into The Financials

Here are a few highlights from the latest financial statements that might interest you as an investor:

1). Huge Unwarranted Cash Balance – When a company, even after purchasing another company for $12.5 billion in cash, still has cash balance of $14.8 billion left in the asset account, there might not be a reason to worry. But when you see that coupled with increasing investment in marketable and non-marketable securities (going well over $34.8 billion as of December 31st, 2012), you might wonder whether the company is not being able to find suitable avenues to invest. We all know that Google Inc (NASDAQ:GOOG) has been showing signs of maturity (as every tech company does), even though it operates in one of the most dynamic industries out there. If I do not hear any news of the “next big thing” in a quarter or two, SergeyBrin‘s action and subsequently, Eric Schmidt’s plan to do the same will hint at something else.

Page 1 of 3
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Countries with the Highest Suicide Rates

The 10 Most Technologically Advanced Countries in the World

The 10 Safest Countries in the World to Live in Peace

The 10 Top Selling Smartphones in the World 2014

The 12 Biggest Shopping Centers in the World

The 10 Friendliest Countries in the World

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!