Chicago Insiders Cash in on Stock Market Surge, Selling $1.12 Billion in Shares

Strategic Insights -

Chicago area companies' insiders, including McDonald's CEO James Skinner and Aon executive Russell Fradin, have sold more than $1 billion in shares of local companies between October and March as the stock market surged. The S&P 500 Index climbed 16% during the same period. University of Michigan professor Nejat Seyhun notes that stock prices have gone up significantly in 2010 and 2011, and many insiders' options have moved into the money.

Key Takeaways:

  • Insiders sold more than $1.12 billion in shares of Illinois companies between October and March, with 535 insiders participating.
  • The sales were driven by the value of shares rising, with some insiders expecting to get a higher price anytime soon.
  • Insiders, including McDonald's CEO James Skinner and Aon executive Russell Fradin, sold shares for various reasons, with some citing the need to diversify their investments.
  • The sales were mostly related to stock options that had moved into the money.
  • Some insiders, like McDonald's CEO James Skinner, appear to be positioning themselves for retirement by selling shares.
  • ValueAct Capital Partners L.P., a hedge fund, reduced its stake in Sara Lee Corp. by about 20% in February, resulting in $128 million in insider sales.
  • Accretive Health Inc.'s insiders cashed out $99 million in March through a secondary stock offering by the company.
  • Insiders at Equity Residential sold $45.1 million in stock as shares rose 19%.

Statistics:

  • 535 insiders sold 44 million shares of Illinois companies between October and March.
  • The total value of shares sold was $1.12 billion.
  • The S&P 500 Index climbed 16% during the same period.
  • McDonald's CEO James Skinner sold 235,000 shares, worth $18.4 million, in October at $78.34 each.
  • Aon executive Russell Fradin sold $31.4 million in Aon shares after the company acquired Hewitt.
  • Insiders at Accretive Health Inc. cashed out $99 million in March.
  • ValueAct Capital Partners L.P. reduced its stake in Sara Lee Corp. by about 20% in February.

Sources:

  • University of Michigan professor Nejat Seyhun, quoted in the article as noting that stock prices have gone up significantly in 2010 and 2011, and many insiders' options have moved into the money.
  • Washington Service, a Bethesda, Md.-based company that tracks insider trading.
  • Article by Crain Communications Inc., "Chicago Insiders Cash in on Stock Market Surge, Selling $1.12 Billion in Shares".