☕ What to make of the “great cash out”

Good morning! 👋  

There’s not a lot happening in the markets today that we haven’t already talked about, so I thought we take a quick look at something making the rounds lately. 

Insider selling. 

Chances are you’ve heard about it. 

Scores of corporate insiders are selling shares in what some are calling the “great cash out.” 

Examples include: 

• Nvidia (NVDA) insiders selling $80M in stock after earnings surge (Bloomberg) 
• Insiders at Marvell Technology (MRVL) ditching US $6.3M in Stock (Yahoo!Finance) 
• The Walton Family unloading $4.5B worth of Walmart (WMT) ahead of its 3-for-1 stock split. (KHBS) 
• JPMorgan Chase (JPM) CEO Jamie Dimon jettisoning $150M worth of shares in his first ever sale since taking over the company nearly 20 years ago. (Reuters) 
• Advanced Micro Devices (AMD) CEO Lisa Su tallied $20M, apparently with more to follow. (MarketWatch) 
• META CEO Mark Zuckerberg sold another $80M of shares on the 21st , bringing his total to $428 million this year. (Investopedia) 
• Amazon (AMZN) founder, Jeff Bezos has ‘em all beat, though, having offloaded a staggering $8.5B (Wall Street Journal) 

Naturally, people are suspicious. 

The implication is that they – the insiders - “know” something or are otherwise up to no good.  

For the most part, stuff like this is a non-issue.  

It’s part of the puzzle but in the scheme of things... just noise. 

Executives are people, too.  

They have liquidity events constantly for all the same reasons you or I might... like paying for a house, an education, taking care of elderly parents, medical bills, setting up retirement etc. 

What’s more, they’re subject to Rule 10b5 which was enacted by the SEC in 1934 to prevent the buying or selling of shares based on insider information. And, not for nothing, which allows insiders to create trading plans in advance on preset dates or at preset prices. 

If there is anything unusual, it’s the “clustering” of sales – meaning that there’s a slew of ‘em happening all at once. 

That's what catches my attention. 

My experience has been that’s usually something we see when there’s a major change in tax law pending or election fears about what a change in administration could mean for our wealth. 

Most of the time, it’s precautionary behaviour. 

Executives tend to have long tenures at the companies where they work which means that there is a very real risk that their personal portfolios become overly concentrated. Selling helps ‘em diversify. 

What catches the public’s eye is that the moves they make are often on a scale that the rest of us simply can’t imagine. Especially these days when times are tough. 

Take Bezos, for example. 

He recently beat feet to Miami from Washington State in a move that may have saved him as much as $600 million in taxes by helping him avoid a controversial 7% excise tax on capital gains, bonds and other assets in excess of $250,000 in a calendar year enacted here. 

Officially, he wanted to be closer to family – wink, wink. 

Then there’s Snowflake’s now-former CEO Frank Slootman. 

He announced yesterday that he’s retiring at the age of 65, which isn’t particularly unusual. But it certainly begs the question about the ~$20M he just booked by selling 86,078 shares on the 8th of this month and before the company issued weak guidance he most certainly knew about. Shares are down 20% in the pre-market as I type. 🤦‍♂️ 

The point I want to make is that you and I could go ‘round the mulberry bush all day long about stuff like this.  

We may agree, we may not – that's moot. 

I don’t have the luxury of taking sides in my capacity as an investment strategist. I do money and my job is to help you chart a course forward by making sense of what’s happening. 

Three things come to mind. 

1. Big-money tax planners are spooked for reasons that are not yet entirely clear. My guess is that a good chunk of what’s happening is related to the so-called 2025 Tax Sunset when Trump-era tax breaks associated with the 2017 Tax Cuts and Jobs Act go away. Changes include individual tax rates that revert to 2017 levels, standard deductions that get cut in half, a cut in child tax credits, a reduction in estate tax exemptions and more. 
2. Tax planning and minimization is legal at any level, but evasion is not. Technology has made many companies substantially more valuable as executives have come up through the ranks. So, these folks have a disproportionate amount of wealth tied up in stocks of the companies they founded, took public or otherwise work for. Most of the sales appear to be one-offs, not en masse by corporate executives, save Snowflake where it appears that others including SVPs Christian Kleinerman, Dageville Benoit, and CRO Grzegorz Czajkowski have been booking consistent 6-7 figure sales since 2023 side by side with Slootman. 
3. Don’t jump to conclusions; pre-planned insider sales are not an automatic exit sign. Just an input, especially when the insiders in question don’t have a clear history of selling near prior price peaks. 

Stay focused! 

Bottom Line  

People treat investing like it's one and done.  

Not true.  

Profits are about controlling the game. 

You got this! 

As always, let’s MAKE it a great day. 

Keith 😊