The answer is astounding.
241 million shares worth a whopping $9.8 billion.
Mark Zuckerberg, who is “only focused on a great product and not making money”, sold 30.2 million shares for $1.14 billion.
Goldman Sachs sold 24.3 million shares for $923 million.
However, that’s just statistics. The question is why?
Why would they make such a big investment and then dump the shares before the company has been public for 6 months?
This leads to speculation.
Maybe they don’t like the outlook.
Maybe they think it’s overvalued.
Or maybe the simple answer is, why not?
Why not take a billion in profits off the table?
Let’s change our focus now. Let’s not get caught up in who’s making what. Instead, let’s zoom in on how we can benefit from being aware of what these insiders are doing. We knew Zuckerberg was selling stock. That information was out there. Then the stock dropped from over 40 to 20. Now, I want to ask: Did you profit from that? As it was an ipo, you could not short the stocks so the only way would have been to buy puts. But that’s just one stock.
Every day there is institutional money flowing in and out of stocks.
What’s the difference between institutional and non-institutional investors?
Institutional investors are the big guys that move the stocks. They include: pension funds, mutual funds, money managers, insurance companies, investment banks, commercial trusts, endowment funds, hedge funds, and some hedge fund investors. Combined, they account for half of the volume on the NYSE. They have an extreme impact on stock’s movements.
Before Facebook lost half it’s value, look what these institutions did:
Accel partners sold 57.7 million shares for $2.1 billion.
Elevation Partners sold 4.6 million shares for $175 million.
Meritech Capital sold 7 million shares for $266 million.
Having just launched a program that follows the institutional money coming in and out of stocks, I have seen first hand the direct impact that these institutions have on a stocks direction.
When we sent an alert on Spectrum Pharmaceuticals at 11.01 on 6/3/12, it hit 15.63 on 7/24/12. That’s a 41.96% gain.
Now I put my best foot forward as that had the biggest jump but check out all of the first weeks picks. and how they are doing now. The stocks with money coming in did fantastic and the ones with money coming out all went down.
SMART MONEY TRACKER
|Increase in Institutional Ownership||6/3/12||7/24/12|
|Pandora Media Inc. (P)||9.96||9.59||-0.37||-3.71%|
|Amylin Pharmacueticals Inc. (AMLN)||26.73||30.79||4.06||15.19%|
|Spectrum Pharmacueticals Inc. (SPPI)||11.01||15.63||4.62||41.96%|
|Solazyme Inc. (SZYM)||10.48||13.34||2.86||27.29%|
|Prospect Capital Corporation (PSEC)||10.71||11.06||0.35||3.27%|
|Decrease in Institutional Ownership|
|Apollo Group Inc (APOL)||31.6||27.62||-3.98||-12.59%|
|Coffee Holding Corp (JVA)||7.43||5.42||-2.01||-27.05%|
|On Assignment Inc (ASGN)||15.24||14.72||-0.52||-3.41%|
|Marketaxess Holdings Inc (MKTX)||30.64||28.6||-2.04||-6.66%|
|Power Integrations Inc (POWI)||39.36||34.27||-5.09||-12.93%|
In this case, knowledge really is power.