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Eric Schmidt To Sell Up To 42% of Stake In Google
derGoldstein writes "AllThingsD reports that Eric Schmidt 'plans to sell up to 3.2 million shares of his class A common stock in the company,' according to an SEC filing. 'The amount is equal to approximately 42.1 percent of his overall stake in Google.'"
Diversifying investment portfolio is something that all good investors tend to do. Eric Schmidt is a businessman too.
Is it "totally understandable"? Interest rates are basically zero, which means that taking money "here and now" doesn't gain him anything. He might want to invest elsewhere in order to diversify his portfolio but such a move would only make sense given an underlying principle that he a) suspects something may perform better than GOOG or b) has uncertainties about the future of GOOG (to the point where cashing out now and stuffing cash in his mattress is better than holding onto GOOG). It isn't to say either of those reasons are "bad" from a savvy-businessman point of view, but it also doesn't mean you can simply dismiss the action as "totally understandable" either.
Bear in mind that Schmidt is selling a good portion of his class A shares which only get one vote per share, but none of his class B shares which get 10 votes per share. I'm not sure how much this will affect the balance of shareholder voting, but he is still holding on to the more influential shares.
Careful with the vagueness there. That's 42% of his stake in Google, not to be confused with 42% of the company's stock.
Federal Income Tax is down - almost every other tax has increased. Local wage taxes, state income taxes, sales taxes, property taxes... It took the recent financial crisis to knock us back down to 1970s levels, but expect that to ramp back up as the economy recovers. Just prior to the financial crisis, we were at an all-time high for total tax burden as a percentage of GDP.
Got my numbers here.
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
I am not exactly sure what insider trading is, but since he not only knows the inner workings of Google but controls them, how is this not insider trading?
It *IS* insider trading. Any CEO selling their own stock is insider trading. That is why the SEC requires documentation and a public disclosure of any potential transaction before the sale happens, which is what the linked document is. The SEC cannot prohibit such sales, but they do put them under extremely tight restrictions - such as preventing such sales near the end of a quarter, when financial results are known internally but not yet released.
It is important to note that this does not mean that Eric *is* going to sell 42% of his stake, it means that he is now *allowed* to sell *up to* 42% of the stock. Many such filings end up with a smaller amount sold.
It's high risk. Having a large proportion of your personal wealth on one stock is ALWAYS high risk. That stock is at an all time high. P/E is at 24 and cash flow appears to be peaking.
That's not to say that they aren't in a good financial position. They are very strong but nobody can know the future. Moving a large portion of his investment to more conservative positions is prudent.