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Since Facebook’s (Nasdaq: FB) May 2012 IPO, Chief Operating Officer Sheryl Sandberg has steadily sold chunks of stock worth millions.
In fact Sandberg has sold over $500 million in Facebook stock. Should you be concerned if you own shares of Facebook?
I don’t think so. Here’s why.
Generally speaking, it makes complete sense to worry about insider selling if you are a shareholder. After all, how can you be confident in your investment if the people who know the most about the company are selling their shares?
The reality is that insider selling isn’t necessarily a bad thing. On the flip side, insider selling isn’t necessarily a good thing.
Company executives know that investors monitor insider transactions and can use stock purchases to make investors interested in their company’s stock.
The important thing to understand about insider buying and selling can be summed up in one word.
Why?
Ask yourself why the insider is selling. Have they been selling shares for a long time or is this a recent development? How much are they worth? Where is his or her wealth concentrated?
Let’s consider each of these questions as they relate to Sheryl Sandberg and the $500 million worth of Facebook stock that she has sold.
Sheryl Sandberg has been selling stock every couple of months since her post-IPO trading restrictions were lifted. She began selling Facebook stock in October 2012 and the most recent transaction was last week.
In that span of time she has filed 41 separate SEC documents reporting transactions. That’s roughly two transactions per month.
Considering that her transactions have been consistent and seem to disregard the stock price, I don’t see anything about her selling activity that points to trouble at Facebook.
Let’s talk about Sandberg’s net worth.
Forbes estimates that Sheryl Sandberg’s is worth around $1 billion. And it seems that since Facebook’s IPO, Sandberg has been strategically spreading out her wealth.
Even after selling over $500 million worth of Facebook stock, she still has around $507 million in Facebook shares. She also holds a little over $420,000 worth of Starbucks (Nasdaq: SBUX) from her stint as a company director and about $1.4 million worth of Walt Disney Company (NYSE: DIS) stock as a current board member.
Roughly 50% of her net worth is still tied up in Facebook stock.
The remainder of her $1 billion net worth is likely made up of stock proceeds as well as earnings from her bestselling book, Lean In: Women, Work and the Will to Lead.
When Facebook IPO’d in 2012, Sandberg’s net worth was estimated at $500 million with $420 million tied up in Facebook stock. At that time 84% of her net worth was tied up in Facebook stock, down now to around 50%.
From a personal finance perspective, this is diversification in its simplest form. And I expect Sandberg to continue selling Facebook stock to spread out her wealth even more.
If I owned shares of Facebook of course I would prefer to see Sheryl Sandberg buying instead of selling. Few things give investors confidence like seeing insiders purchase more and more of their company’s stock.
I see this as Sheryl Sandberg diversifying her wealth and nothing more.
Considering that her trades have been planned well in advance, consistent over time and that she still holds over $500 million worth of Facebook stock, I don’t think Facebook shareholders should be worried about Sheryl Sandberg selling Facebook stock.
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