It always makes me a bit edgy when directors start offloading significant portions of stock, especially if I have an interest in the company.
Sure, there may be perfectly good reasons: A new Ferrari for the collection, the tennis court may require resurfacing or perhaps the Toorak mansion's due for a renovation.
Then there's all those stories: Enron, Goldman Sachs, Wells Fargo, Sirtex Medical Limited (ASX: SRX) etc.
So, to reiterate, although it is often perfectly legal for corporate insiders to sell stock and they may have perfectly good reasons for doing so, it is easy to understand why shareholders can get a bit nervous when directors start opting out.
This month, Orora Ltd (ASX: ORA) directors sold more than $8 million worth of shares in the manufacturer and supplier of packaging solutions with operations in Australia, New Zealand and North America.
Orora CEO and managing director, Nigel Garrard, sold more than 1.9 million shares in his company for $3.28 per share earlier this month.
Mr Garrard, a former executive with Coca-Cola Amatil Ltd (ASX: CCL) and Amcor Ltd (ASX: AMC), collected more than $6 million from the sale, according to an announcement made by Orora.
And Orora's Chairman Christopher Roberts, who has previously held directorships with Telstra Corporation Ltd (ASX: TLS) and Australian Agricultural Company Ltd (ASX: AAC), this month sold off more than $1.9 million worth of Orora stock.
Mr Roberts sold more than 600,000 shares at $3.27 a piece, according to Orora.
But both those Orora directors would have done a little better if they held their stock a bit longer.
The share price of Orora, with a market cap of $4.09 billion, closed at $3.39 on Monday.
However, those transactions combined pale in comparison to the recent sale made by the chairman of Medical Developments International Ltd (ASX: MVP), which has a market cap of $360.5 million.
David Williams, who is also the chairman of Polynovo Ltd (ASX: PNV), this month sold more than 4 million shares at $5.40 each to take home about $23.5 million.
But if Mr Williams held out for a bit longer he would have pocketed an extra $2,610,000, as the Polynovo share price closed at $6.10 on Monday.
But we don't need to feel too sorry for Mr Williams for missing out on more than $2 million.
He scooped up almost 250,000 shares in Polynovo when it was trading at 19 cents in August.
The Polynovo share price closed at 32 cents on Monday.
Mr Williams still remains a substantial shareholder of Medical Developments, having an indirect interest in more than 13 million shares, according to the company.
As such, while history has provided numerous startling examples of corporate insiders abusing their power to the detriment of shareholders, when directors sell significant stakes in their companies, although some may get edgy, it doesn't always mean the ship's about to sink.
In fact, if this article demonstrates anything, it shows that even insiders don't always get out at the most opportune time.
