- Top corporate insiders are selling their stock at a record pace in 2021 ahead of potential tax changes and amid record high stock prices.
- 48 top executives have each sold more than $200 million in stock this year, according to a report from The Wall Street Journal.
- Top stock sales this year have come from Elon Musk, Satya Nadella, Mark Zuckerberg, among others.
Soaring stock prices and potential changes in the US tax code have spurred record equity sales by top corporate executives, according to a report from The Wall Street Journal.
Through November, 48 top executives have each sold more than $200 million in their company's stock, nearly four times the average number of insider sales from 2016 through 2020. Altogether, top insiders at companies like Walmart, Tesla, and Microsoft have sold a combined $63.5 billion in company stock this year, up about 50% from 2020.
Waves of insider sales have come from Alphabet co-founders Larry Page and Sergey Brin, Tesla CEO Elon Musk, and Microsoft CEO Satya Nadella, among others. The tech sector has led the pace of insider selling, with $41 billion in stock sales across the entire market, according to the WSJ report.
These record insider sales are reminiscent of a surge in sales by insiders during the early 2000s dot-com bubble, when sky-high tech valuations were disconnected from reality. Insiders have historically been good market timers in terms of buying their stock near bottoms and selling their stock near tops.
While record highs in the stock market have made it more appealing for insiders to unload their stocks and recognize profits, a potential increase in the long-term capital gains tax rate in Biden's Build Back Better legislation could also be incentivizing insiders to reduce their stakes and lock in a lower tax rate.
If the proposed tax hikes go into effect next year, corporate executives could save up to $8 million in taxes on every $100 million shares sold ahead of the effective date, representing a significant incentive to unload shares sooner rather than later.
Elon Musk has sold more than $12 billion in Tesla stock this year, and he could have another $8 billion to sell if he stays true to his Twitter poll from earlier this year that he plans to sell 10% of his stake, or about $20 billion.
Microsoft CEO Satya Nadella sold $285 million of his stock last month, ahead of Washington State implementing a 7% tax for long-term capital gains next year.
"People are clearly being opportunistic. These guys have been telling you all year that the market is overheated," InsiderScore's Ben Silverman told The Wall Street Journal.