When the S&P 500 index reached a new high for the year, some insiders of companies with strong stock performance began selling their holdings to lock in profits.
According to data compiled by The Washington Service, filings submitted by executives and directors of NVIDIA Corporation last month showed that they have sold or plan to sell approximately 370,000 shares of NVIDIA stock worth about $180 million. If all these stocks are eventually sold, it will be the largest monthly sell-off in terms of value in at least six years.
The market’s performance also reflects this trend. NVIDIA has seen a cumulative increase of over 200% for 2023, but most of the gains were recorded in the first half of the year. Two weeks ago, just before NVIDIA was about to announce its Q3 earnings, the stock price hit an all-time high. However, even with explosive revenue and EPS growth reported afterwards, the stock price subsequently declined significantly and fell more than 6% as of last week.
Specifically speaking, among four insiders is Mark Stevens who has been serving as a director since 2008. This former partner at Sequoia Capital submitted Form 144 on November 24th and sold 300,000 shares on that day and another 10,280 shares on November 27th which accounted for the majority.
Other sellers include Debora Shoquist who is an executive vice president responsible for operations and Dawn Hudson who joined the board in July. However according to media compilations’ data even after selling NVIDIA stocks Stevens still holds shares worth around $2 billion.
Media analysis believes it is understandable that executives want to lock in profits after such a surge in stock prices. However they did not buy when stocks fell back down possibly thinking it would be difficult for prices to replicate previous upward trends. Data shows that since 2020 there have been almost no purchases made by insiders at NVIDIA.
Shana Sissel CEO of Banrion Capital Management, which holds NVIDIA stocks, said “There’s a lot of selling and not much buying going on. That’s interesting. Given the stock performance, it makes sense for them to convert some compensation into cash.”
This phenomenon is also seen in another tech giant Meta Platforms where founder and CEO Mark Zuckerberg has been frequently selling shares over the past month. The total cumulative sales amount to over 682,000 shares with proceeds exceeding $185 million.
Perhaps due to these factors, last week the NASDAQ Composite Index, which is dominated by technology stocks, only saw a cumulative increase of 0.38%, lower than the S&P and Dow Jones’ increases of 0.77% and 2.42% respectively.