Major Insider Selling To Set Records in December (AMZN, BRK-A, DDS, DTV, DG, EMC, EXPE, FDX, GPS, GENZ, INTC, JBHT, MSFT, JWN, ORCL, RL, CRM, SLB, SBUX, SCHW, VMW, WMT, WFMI, WYNN, DELL, LVS, GOOG)

Insider selling by millionaire and billionaire corporate insiders is already rising, but it is about to go through the roof.  Forget the politics and forget the morale left behind as a result, and go ahead and forget about what might be best for their employees and shareholders and the government.  Corporate insiders will be hitting the eject button on their personal holdings of their corporate stocks most likely at a rate higher than you have ever seen between now and December 31, 2010.  In some cases you are already seeing it.

There is a once or twice a generation event occurring and investors need to know which companies will have record insider selling at between now and the end of 2010.  That event on December 31, 2010 is the expiration of the Bush tax cuts, and insiders may never get a chance to have only 15% capital gains tax ever again.  Some may say that this is avoiding higher taxation.  Some may say it unpatriotic.  Some may even call it the epitome of wealthy convenience.  Either way, it is legal and “for estate planning purposes” makes financial sense.  You have probably noticed that many millionaire and billionaire corporate insiders have begun the long capital gains process when and where possible.  Again, this is only going to increase from now until the end of 2010.

A list of just some of the major companies with major insider positions are as follows: Amazon.com Inc. (NASDAQ: AMZN), Berkshire Hathaway Inc. (NYSE: BRK-A), Dillard’s Inc. (NYSE: DDS), DIRECTV (NASDAQ: DTV), Dollar General Corporation (NYSE: DG), EMC Corporation (NYSE: EMC), Expedia Inc. (NASDAQ: EXPE), FedEx Corporation (NYSE: FDX), Gap Inc. (NYSE: GPS), Genzyme Corp. (NASDAQ: GENZ), Intel Corporation (NASDAQ: INTC), JB Hunt Transport Services Inc. (NASDAQ: JBHT), Microsoft Corporation (NASDAQ: MSFT), Nordstrom Inc. (NYSE: JWN), Oracle Corp. (NASDAQ: ORCL), Polo Ralph Lauren Corp. (NYSE: RL), Salesforce.com (NYSE: CRM), Schlumberger Limited (NYSE: SLB), Starbucks Corp. (NASDAQ: SBUX), The Charles Schwab Corp. (NYSE: SCHW), VMware, Inc. (NYSE: VMW), Wal-Mart Stores Inc. (NYSE: WMT), Whole Foods Market, Inc. (NASDAQ: WFMI), and Wynn Resorts Ltd. (NASDAQ: WYNN).  We have provided a table at the end to show just some of the easy to grab companies, the officers, the holdings, and the ‘as of last’ date.

There are many in here that were not included.  Dell Inc.  (NASDAQ: DELL), Las Vegas Sands (NYSE: LVS) and Google Inc. (NASDAQ: GOOG) are two obvious companies with large insider ownership, and there are many others.  The percentage of the total float owned at many corporations gets even more concentrated when you get deeper into many mid-cap and small-cap companies.  Private equity funds still hold millions and millions of shares that have not been unloaded in shares of 2009 to 2010 vintage IPOs.

Even though many think the tax breaks may be extended or may get brought up and retro-acted next year, it is not safe to assume that these millionaire and billionaire insiders will just wait and see hoping to trust the system.  No one really knows at what point the cut-off will be in income.  Now that there is gridlock, many fear that President Obama can just sit back and say “NO” to any tax breaks that pertain to the wealthy.  Others will say that the new quasi-majority of the Republicans just want to get cronies tax breaks.  If a tighter lock-up period exists, these insiders may very well ask for board permission to break ranks and sell early.  In most cases, it is not exactly as though these insiders have to go get shareholder approval.  A simple board approval or even a simple exemption may be sufficient.  And don’t think that this just pertains to the wealthy insiders.  All of the millions and millions of stock options

The reality is that if you are a corporate insider, December 31, 2010 could be the last day of that person’s life that the capital gains tax is as low as 15% ever again.  Even if legislation gets going, the President can veto it and Congress is divided enough that a super-majority cannot undo the vote.  It will of course be called for “estate planning” or for “tax planning” but it should just be expected.  Many are hoping and praying that the tax breaks will be extended.  The problem in tax planning and in financial matters is that the strategies of hoping and praying are fine backup plans but they make for awful primary action plans.

As noted, we prepared a chart showing the insider holdings by company, name, share count, and the last ‘as of’ date.  You need to know that some of these insider positions are probably different by now in many cases.  The insider ownership rosters often do not tally every single share and often skip or eliminate those precious insider stock options.  Many other companies have the super-shares, and there are many missed that did not cover other family trusts and others which may not have included indirect ownership via stock option grants.  The goal is not to get the count accurate down to the share, but rather to show a ballpark estimate that will let you know how much is at stake.

JON C. OGG