Google Alert!!!

Well, my obsessive Columbo/Monk side has paid off again as I have been digging and digging to figure out what to do with Google next week. Sell it! Get out! Run away! Yes that’s right I am off the fence on this one for sure. Why? Sergey, that’s why. Sergey made the Fortune 500 list of Billionaires at #26 this week with $12.8Bn dollars. While a lot of that is Google stock, he has cashed in 6M of his 35M shares already for a cool $1.8Bn. Now I have no issue with someone who is rich in one company diversifying his holding (it’s crazy not to) but it’s the recent trades that bother me. Keeping in mind that we are in pre-earnings, Sergey has sold off $300M worth of stock since 2/1, while it was down $75-130 from its highs. Now I know gas is expensive in California but if he didn’t believe the company should be going down in price, why would he take a $100M haircut selling it just before earnings? Even a guy with $1.7Bn in cash (I figure he blew $100M on something nice for himself by now) should care about wasting $100,000,000. These are not options he was forced to exercise, these were conversions of his Class B owners shares into class A common shares that were sold on the open market. If you bought 200 shares of Google stock in the past month, then one of those shares was Sergeys! Here is what he started with in the first filing I could find on 2/25/05: http://sec.gov/Archives/edgar/data/1295032/000118143105013301/xslF345X02/rrd70744.xml Here is the filing from 3/8: http://www.sec.gov/Archives/edgar/data/1288776/000118143106017458/xslF345X02/rrd110917.xml While schmucks like me were buying up the stock as Google assured us everything was great, a man with a net worth of $12,90,000,000 felt it necessary to sell $300,000,000 after an earnings miss, a CEO gaff and an errant slide consecutively dropped the price. http://www.form4oracle.com/insider?cik=0001295032&page=1 Notice Sergey loaded up another 130,000 shares (Conversion) for sale yesterday, thats another 1% push down on Monday as he dumps them on the open market (LVS watchers take note!). http://www.form4oracle.com/company?cik=0001288776&ticker=goog If you can think of a scenario where you wouldn’t wait until the company you have faith in rebounds, please leave me a comment because both companies I’ve owned you had to pry my stock out of my cold, dead fingers before I would sell it during a rough patch for a discount! This is not diversification, this is a declaration that out of $1.7Bn worth of things (figure he keeps the other $100M for walking around money) that Sergey and his advisors have put his vast wealth into, Google cannot be very high on that list! Without going into droning detail, Larry is in roughly the same boat while Reyes also augments his salary with monthly sales of stock with roughly 20,000 a month in sales ($7M). Side Note: It looks to me like he increased his holdings of SYMC by over 170,000 shares this year, which I find very interesting as he used to be a director there. Speaking of Reyes, I also like the little “gifts” of stock he got on Thursday (see above link) of 2 x 16,666 (hmm, interesting number from the do no evil boys!) – obviously, an $11M bonus for doing such a bang-up job last week, or perhaps for taking the fall you might say if you were one of those conspiracy types… All in all, Google insiders have sold $3.6Bn (10%) of their $35Bn in holdings in the past 6 months but that’s nothing compared to institutions which have shed 49M shares of stock (30%) this quarter alone! http://finance.yahoo.com/q/it?s=GOOG I hate to say “rats leaving a sinking ship” as it sounds alarmist but when 1/3 of the people on the boat run past you screaming for the liferafts, do you say “Cool, more deck chairs available near the bar!”? Now, indulge me please while we take a closer look at this form: http://www.sec.gov/Archives/edgar/data/1288776/000118143106017456/xslF345X02/rrd110916.xml This is a great chance to see how professional traders dump a stock! http://finance.yahoo.com/q/bc?s=GOOG&t=1d&l=on&z=m&q=l&c= During a week when the company dropped from $380 on Monday to $360 on Wednesday morning, Sergey converts 131K shares on Wednesday, 138K on Thursday and 130K on Friday. He (his broker, obviously) dumps his first load on the market on Wednesday morning (remember, the stock is already down to $356 about $120 off its high) selling 6K shares at the open dropping the price $1. He then sells a block of 5K and another, driving the price down to $356. He sells another 1,000 shares and can only get a penny over $356 so he dumps another 7.8K shares for $356. Then a little light selling (hoping for it to pick back up) until the stock drops to $355.50 where he gets rid of another 4.2K shares. Then, a lot of light selling in the upper $355 range until the stock dips to the next trigger at $355,25 where he quickly sells another 15K shares, driving the price down to $354.25. Form 2 (same day): http://www.sec.gov/Archives/edgar/data/1288776/000118143106017458/xslF345X02/rrd110917.xml At this point the stock is looking like not many suckers are coming in and Sergey is still sitting on about 78,000 shares out of 399K he converted for the week so at $354 he quickly dumps a block of 34,877 shares, driving another .50 off the price for you and me. He triggers another 7,300 shares at $353.50 and 7K more at $353.25. At $353 he gets fed up and flushed a 12K block and then drives the price all the way down to $351.85 as he gets rid of his last 16,000 shares for the day. As you know, it’s all downhill from there for the next 2 days… “Do no evil” apparently doesn’t apply to leaving your shareholders twisting in the wind while you pick up a little gas money ($139M in 3 days) for the private jet! I am now putting this stock on Las Vegas Watch, which is my lowest of all stock ratings in honor of the great manipulation game that is LVS (don’t get me started on them today!). This is not to say short it – this is to say that the stock is clearly way overpriced in the view of the people who own it already and you should be very suspicious of any “rally” that is not based on some sort of astoundingly good news. Insiders still own 35% of the company and 38% is still held by institutions (and Friday is the end of the quarter so really watch out there!) so there are close to 1,000 people with millions on the line here. The 100 most powerful shareholders are also the 100 with the greatest concentration in stock, $5M and up who stand to lose 1/2 or more if this thing tanks. Don’t forget the insiders don’t actually have 90% of their money – it’s all in the stock! The institutions stand to lose money they either put in at a higher price (imagine explaining to your investors that you jumped in at $475) or (like most) booked it on Dec 31st as $413 per share in their virtual portfolio. So the question is, if you go up to 100 people with a briefcase full of $2.5M in cash: How many will lie (or perhaps just not mention a pressing problem)? How many will cheat (or perhaps just be overly optimistic)? How may will steal (really screw you with no regrets)? The answer better be none, but the question is going to be: Deal or No Deal!