So far in October, almost $1.24 billion in stock has been sold by CEOs and other executives to cover debts, according to Ben Silverman, director of research at InsiderScore.com, which monitors SEC filings. Another $250 million in stock sales may also be related to so-called margin calls—when lenders force the sale of stock to cover debts.
The point was driven home on Tuesday, Oct. 21, when billionaire Kirk Kerkorian‘s Tracinda Corp. disclosed it sold off 7.3 million shares in Ford Motor (F) and may sell the rest of its stake in the automaker. Originally valued at almost $1 billion, Kerkorian’s stake has lost more than two-thirds of its value as Ford’s stock price has plummeted. It closed Tuesday at 2.17 a share, down 7% for the day. Though the exact reasons for Kerkorian’s sale aren’t clear, he had borrowed $600 million to buy the Ford stake and recently needed to use casino holdings to back that debt.
First Sumner Redstone, chairman of Viacom (VIAB) and CBS (CBS), sold $233 million in stock to help cover a loan. Then John Malone, chairman of Liberty Media (LCAPA), sold $49.5 million in stock to pay back a loan to Bank of America (BAC).
Chesapeake Energy (CHK) Chief Executive Aubrey McClendon may be the worst hit by this sort of stock squeeze. As Chesapeake’s stock surged higher, the firm’s enthusiastic founder borrowed to buy more and more shares. That worked until the middle of 2008: Since the beginning of July, Chesapeake shares have slid almost 65%. From Oct. 8-10, McClendon was forced to unload $569 million in his company’s stock, or 94% of his stake in the firm, to cover those debts.
Marvin Herb, a director at large bottling firm Coca-Cola Enterprises (CCE), who sold $17.7 million worth of shares Oct. 8-9.
• The co-founders of Boston Scientific (BSX), Peter Nicholas and John Abele, who sold off a combined $292 million in shares Oct. 8-17.
• Mark Grier, chairman of Prudential Financial (PRU), who sold off $1.75 million in shares on Oct. 10.
• Scholastic (SCHL) Chairman and CEO Richard Robinson, who sold shares valued at $3.1 million on Oct. 10.
• Tesoro (TSO) Chairman and Chief Executive Bruce Smith, who sold $2.2 million in shares on Oct. 10.
• Williams-Sonoma (WSM) Chairman and Chief Executive Howard Lester, who dropped $12.98 million in shares of his firm Oct. 13-14.
• XTO Energy (XTO) co-founder, Chairman and Chief Executive Bob Simpson, who sold off $101.3 million in his company’s stock from Oct. 6-7.