8 ms·

Ballmer sells 20% of his MSFT holdings

29 points by 425 16y ago

trebor 16y ago
I'm no expert, but this just screams doom to me. When someone inside the company sells their shares in this quantity it's _always_ before something big. I won't speculate at what is going on inside, beyond all the negative image lately, but it can't be good. And if he wanted to diversify his portfolio then he should buy some APPL! (Laughed at my own joke, too.)
- chunkbot 16y ago
  It doesn't scream "doom" to me; Ballmer's sale looks like it was done mostly for tax purposes.
  - aaronbrethorst 16y ago
    It still sounds bad to me. It says to me that Steve thinks there's more upside in lower cap gains taxes than hanging onto the stock. In other words, MSFT is stagnant now and it's going to be stagnant for years to come. If Steve had been doing what Bill does—selling off a big chunk of stock every quarter—no one would've even blinked at this.
  - brudgers 16y ago
    Some reports put Balmer's total sale at $1.3 billion. The 5% increase in the capital gains tax rate represents up to $65,000,000. Even for a billionaire, that's real money.
- cmelbye 16y ago
  I'm assuming that what you're describing is not the case. Selling because you know that something big is about to happen is insider trading.
- deleted 16y ago
  [deleted]
- bhiggins 16y ago
  it screams QE2 to me
yatsyk 16y ago
IMHO very good time for sale: few days after record revenue announce.
- CamperBob 16y ago
  He could've done even better by announcing his resignation and then selling on the Fiorina-like bounce it would have engendered.
- morphir 16y ago
  to me it sends the wrong signal to other share holders. Sell now while the share has a temporary peak. their up and coming smart-phone business and being able to integrate that with their other online products like Bing will decide whether MS will grow or die. They are late in all domains, so they are gonna have to impress by pushing the experience to new heights.. which I doubt they will pull off considering they have a poor product development culture compared to apple and google.
coliveira 16y ago
I believe the main reason why MSFT is stagnant is that the biggest shareholder (Bill) is selling this stuff constantly. His must have sold tens of billions of MSFT is the last few years. It is just the inverse of a company like IBM that is actively buying shares.
- vladd 16y ago
  According to http://www.google.com/finance?q=msft http://www.google.com/finance?q=msft , 1% of Microsoft shares changes hands each day. This means that every 3 months, on average, every Microsoft share changes hands once. Bill's selling represents less than 100% and occurred over a decade, which is a much larger time interval. Nowadays mutual/hedge funds look at the company performance (earnings) and at the stock price and effectively pour in the capital whenever the P/E ratio drops below their threshold, thereby effectively compensating the effect of those sales. When 1% of a company's shares changes hands each day you can't really blame Ballmer for stock price fluctuations. In regard to IBM, when a company buys back its shares it effectively reduces the number of outstanding shares on the market (and thus it increases their rarity and therefore their price), but the money used for the buy-back could have been instead paid in dividends or used for an external acquisition. It is a management decision that partially says "we didn't find anything else better to do with the money than this", but it's too complex to be analysed in a comment's paragraph. The Ballmer transaction is on the market, investor-to-investor; it doesn't change the number of outstanding shares nor does it dilute the price.
  - coliveira 16y ago
    > 1% of Microsoft shares changes hands each day yes, but these are transactions that follow the pattern of the market. Usually they even out, with a few days having more sellers and on other days more buyers. When you have a share repurchase program, you are basically giving a support for the market. It is hard for the stock to go much lower, because the company is always buying. Bill and Ballmer, on the other hand, are selling shares. This is not good for the stock, even if spread over a long time.
    - 16y ago
vladd 16y ago
He sold 12% of his MSFT shares, not 20% like stated in the title: 49.3 million shares out of a total of 408 millions that he owned (SEC link: http://sec.gov/Archives/edgar/data/789019/000119309910000081/xslF345X03/edgar.xml http://sec.gov/Archives/edgar/data/789019/000119309910000081... ). He said he might sell more by end-year, but didn't guarantee that he'll do that ("He said he plans to sell as many as 75 million shares by year's end"). That would bring his sale percentage up around 18.3%.
cletus 16y ago
This move is a little strange. It's a big chunk to sell all at once and some will interpret it as a de facto vote of no confidence in MSFT. The smoother way for executives to sell their substantial holdings in a company is to say they will sell X shares per year for Y years (typically in the name of diversifying one's holdings) and then put some independent third party (with no access to insider information) in charge of the exact timing of the individual transactions.
- rrhyne 16y ago
  The insider selling to buying ratio has been over 2000 in recent weeks. This is likely less of a dire sign of MSFT's prospects than it is a condemnation of the US economy after Heli Ben's QE2. I bet he pumps it into commodities, metals and markets like brazil that aren't devaluing their currencies.
  - barrkel 16y ago
    Why do you think metals, Brazilian markets etc are a better store of value than MS stock? Why would you expect QE to affect MS stock as a store of value? In what circumstances would MS stock intrinsic value decrease but world commodity prices hold up, if not a business failure of MS itself?
    - rrhyne 16y ago
      MSFT is not immune to economic downturn especially a crash called by a currency crisis. The FED is currently walking a currency crisis tightrope. As for value stores, look at the performance of the Brazilian market over the last few years and gold and silver. Worse, if we have a currency crisis here the entire equities market is toast. The people who called this depression (Schiff, Denniger, etc) are calling for a currency crisis due to the fed's actions.
  - alextp 16y ago
    To be honest, a devaluing currency is precisely what you want to invest in a country, as it makes exports from that country way cheaper.
bill-nordwall 16y ago
He was most likely waiting on the final results of on Washington State's income tax initiative, which would have cost him millions had it passed: http://www.ballotpedia.org/wiki/index.php/Washington_Income_Tax,_Initiative_1098_(2010) http://www.ballotpedia.org/wiki/index.php/Washington_Income_...
patrickgzill 16y ago
I don't think the DAY matters; as I understand it, sales by such insiders have to be filed weeks in advance.
djb_hackernews 16y ago
Hmm, I see a few posts defending this move because of tax implications, putting the cost at $65,000,000 if he waits around for the 20% tax bite. Seems like a pretty big bet that the value of MSFT won't increase by... eh... 70 cents?

29 points by 425 16y ago

I'm no expert, but this just screams doom to me. When someone inside the company sells their shares in this quantity it's _always_ before something big. I won't speculate at what is going on inside, beyond all the negative image lately, but it can't be good. And if he wanted to diversify his portfolio then he should buy some APPL! (Laughed at my own joke, too.)

chunkbot 16y ago
It doesn't scream "doom" to me; Ballmer's sale looks like it was done mostly for tax purposes.
- aaronbrethorst 16y ago
  It still sounds bad to me. It says to me that Steve thinks there's more upside in lower cap gains taxes than hanging onto the stock. In other words, MSFT is stagnant now and it's going to be stagnant for years to come. If Steve had been doing what Bill does—selling off a big chunk of stock every quarter—no one would've even blinked at this.
- brudgers 16y ago
  Some reports put Balmer's total sale at $1.3 billion. The 5% increase in the capital gains tax rate represents up to $65,000,000. Even for a billionaire, that's real money.
cmelbye 16y ago
I'm assuming that what you're describing is not the case. Selling because you know that something big is about to happen is insider trading.
deleted 16y ago
[deleted]
bhiggins 16y ago
it screams QE2 to me

yatsyk 16y ago

IMHO very good time for sale: few days after record revenue announce.

CamperBob 16y ago
He could've done even better by announcing his resignation and then selling on the Fiorina-like bounce it would have engendered.
morphir 16y ago
to me it sends the wrong signal to other share holders. Sell now while the share has a temporary peak. their up and coming smart-phone business and being able to integrate that with their other online products like Bing will decide whether MS will grow or die. They are late in all domains, so they are gonna have to impress by pushing the experience to new heights.. which I doubt they will pull off considering they have a poor product development culture compared to apple and google.

coliveira 16y ago

I believe the main reason why MSFT is stagnant is that the biggest shareholder (Bill) is selling this stuff constantly. His must have sold tens of billions of MSFT is the last few years. It is just the inverse of a company like IBM that is actively buying shares.

vladd 16y ago
According to http://www.google.com/finance?q=msft http://www.google.com/finance?q=msft , 1% of Microsoft shares changes hands each day. This means that every 3 months, on average, every Microsoft share changes hands once. Bill's selling represents less than 100% and occurred over a decade, which is a much larger time interval. Nowadays mutual/hedge funds look at the company performance (earnings) and at the stock price and effectively pour in the capital whenever the P/E ratio drops below their threshold, thereby effectively compensating the effect of those sales. When 1% of a company's shares changes hands each day you can't really blame Ballmer for stock price fluctuations. In regard to IBM, when a company buys back its shares it effectively reduces the number of outstanding shares on the market (and thus it increases their rarity and therefore their price), but the money used for the buy-back could have been instead paid in dividends or used for an external acquisition. It is a management decision that partially says "we didn't find anything else better to do with the money than this", but it's too complex to be analysed in a comment's paragraph. The Ballmer transaction is on the market, investor-to-investor; it doesn't change the number of outstanding shares nor does it dilute the price.
- coliveira 16y ago
  > 1% of Microsoft shares changes hands each day yes, but these are transactions that follow the pattern of the market. Usually they even out, with a few days having more sellers and on other days more buyers. When you have a share repurchase program, you are basically giving a support for the market. It is hard for the stock to go much lower, because the company is always buying. Bill and Ballmer, on the other hand, are selling shares. This is not good for the stock, even if spread over a long time.
  - 16y ago

vladd 16y ago

He sold 12% of his MSFT shares, not 20% like stated in the title: 49.3 million shares out of a total of 408 millions that he owned (SEC link: http://sec.gov/Archives/edgar/data/789019/000119309910000081/xslF345X03/edgar.xml http://sec.gov/Archives/edgar/data/789019/000119309910000081... ). He said he might sell more by end-year, but didn't guarantee that he'll do that ("He said he plans to sell as many as 75 million shares by year's end"). That would bring his sale percentage up around 18.3%.

cletus 16y ago

This move is a little strange. It's a big chunk to sell all at once and some will interpret it as a de facto vote of no confidence in MSFT. The smoother way for executives to sell their substantial holdings in a company is to say they will sell X shares per year for Y years (typically in the name of diversifying one's holdings) and then put some independent third party (with no access to insider information) in charge of the exact timing of the individual transactions.

rrhyne 16y ago
The insider selling to buying ratio has been over 2000 in recent weeks. This is likely less of a dire sign of MSFT's prospects than it is a condemnation of the US economy after Heli Ben's QE2. I bet he pumps it into commodities, metals and markets like brazil that aren't devaluing their currencies.
- barrkel 16y ago
  Why do you think metals, Brazilian markets etc are a better store of value than MS stock? Why would you expect QE to affect MS stock as a store of value? In what circumstances would MS stock intrinsic value decrease but world commodity prices hold up, if not a business failure of MS itself?
  - rrhyne 16y ago
    MSFT is not immune to economic downturn especially a crash called by a currency crisis. The FED is currently walking a currency crisis tightrope. As for value stores, look at the performance of the Brazilian market over the last few years and gold and silver. Worse, if we have a currency crisis here the entire equities market is toast. The people who called this depression (Schiff, Denniger, etc) are calling for a currency crisis due to the fed's actions.
- alextp 16y ago
  To be honest, a devaluing currency is precisely what you want to invest in a country, as it makes exports from that country way cheaper.

bill-nordwall 16y ago

He was most likely waiting on the final results of on Washington State's income tax initiative, which would have cost him millions had it passed: http://www.ballotpedia.org/wiki/index.php/Washington_Income_Tax,_Initiative_1098_(2010) http://www.ballotpedia.org/wiki/index.php/Washington_Income_...

patrickgzill 16y ago

I don't think the DAY matters; as I understand it, sales by such insiders have to be filed weeks in advance.

djb_hackernews 16y ago

Hmm, I see a few posts defending this move because of tax implications, putting the cost at $65,000,000 if he waits around for the 20% tax bite. Seems like a pretty big bet that the value of MSFT won't increase by... eh... 70 cents?