What is it that they know, and we don’t?
First, some background. Wren sold 258,110 Omnicom shares, worth $12, 549,308 on March 9, according to an SEC filing – leaving him with a total of 1,127,721 shares. The sale represents about 19% of his total holding. In fact, that’s not the full picture, because he also exercised some stock options. The full amount realised appears to be nearer $22m.
Roth’s transaction, which will be executed on April 2, is slightly more modest. He’s selling a mere 324,341 shares which, at today’s prices, would net him about $3.85m.
It’s important to note that director share sales (or “insider trading” as it’s misleadingly called in the USA) are not always what they appear to be. CEOs of publicly listed companies have to act with extreme care when liquidating any of their company portfolio, partly to achieve tax efficiency, and partly to avoid spooking the stock exchange (not to mention shareholders) by seeming to offload too many shares at once.
Roth, for example, normally rebalances his IPG holding every year by buying as well as selling stock. That said, I do not see any evidence of him purchasing stock in 2012 – thus far. Indeed, he currently appears to hold the minimum IPG portfolio permitted to him under company rules. That is, shares valued at five times his basic salary.
So, it would appear he is cutting down at a time when IPG’s share price is nearing a high of about $12. Last September, it was in an all-time pit of $7.93, but IPG has been buoyed by a good trading performance of late.
With Wren, the telegraphy seems much clearer. He’s selling a lot of his stake in the company at one time, no two ways about it. Nor has he bought any Omnicom shares over the last year. In fact, no one insider has. Well, almost no one: a mere 500 shares for a total of $20,583 have been acquired.
If I were a securities house analyst, I might cynically conclude we have a “sell” signal here. Though I hope I am wrong about that.