Stock sales are reaping a windfall for the world’s richest shareholders.
Corporate insiders including Amazon.com’s Jeff Bezos and Google co-founder Sergey Brin have ramped up stock sales recently, cashing in on a 14-month long bull market that’s helped boost fortunes to the tune of trillions.
US public company insiders offloaded shares worth $24.4 billion this year through the first week of May, with about half sold through trading plans, according to data compiled by Bloomberg. That’s almost as much as the $30bn total they disposed of in the second half of 2020.
Large shareholders frequently sell stock in planned intervals, often through pre-arranged trading programmes. Yet the prolonged rally in equity markets has made the value of these disposals, whether planned or opportunistic, strikingly high.
There are multiple reasons an investor of any size might be motivated to sell. After the pandemic-defying rally, valuations are increasingly under pressure from rising inflation. Investors are wary the post-Covid-19 recovery could prompt tightening measures from the US Federal Reserve. And President Joe Biden’s proposed tax hikes – including a near doubling of the capital gains rate – have created uncertainty.
Whatever the reason, the sales are flooding the market with yet more liquidity, the consequences of which will ripple through philanthropy, the art market, real estate and other niches.
Mr Bezos has sold $6.7bn worth of Amazon shares this year. While a relative pittance for the world’s richest person, it’s more than two-thirds the value of shares he sold in 2020. Larry Ellison unloaded 7 million Oracle shares in the past week for total proceeds of $552.3 million.
Mr Brin, who has signalled that he intends to sell as many as 250,000 Alphabet shares, has disposed of $163m worth of stock in recent days, his first sales in more than four years, filings show.
Mark Zuckerberg and his charitable foundation, the Chan Zuckerberg Initiative, meanwhile, accelerated their sales of Facebook stock in the fall. Mr Zuckerberg or his charity has divested shares at a near-daily clip since November, for a cumulative total exceeding $1.87bn.
The surging markets have exacerbated the concentration risk of the single-stock-dominated fortunes typical of many tech billionaires, Thorne Perkin, president of Papamarkou Wellner Asset Management, said.
“From a portfolio-management perspective, it makes sense to spread it around,” he said.
Also among the biggest sellers are some noteworthy beneficiaries of the Covid-19 economy. Zoom Video Communications founder Eric Yuan and used-car retailer Carvana’s Ernest Garcia II have together received more than $1.5bn from stock sales since March 2020, according to the Bloomberg Billionaires Index.
George Kurtz, chief executive of cybersecurity firm CrowdStrike, has sold shares worth at least $250m over that period.
Zoom founder Yuan – the poster child, in many ways, for the coronavirus economy – has stepped up his sales this year as the firm’s share price slumped. In 2020, he typically offloaded about 140,000 shares a month through a trading plan, which generated more than $350m over the course of the year.
Since March, he’s sold almost 200,000 shares a month on average, yielding him about $185m. He also donated more than a third of his stake in the San Jose-based company as part of “typical estate planning practices”, according to a spokesman. Some of the cash from his share sales fund donations to unspecified “humanitarian causes”.