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Insider Stock Sales Rise To Two-Decade High In The US

What’s happening?

Executives at Walmart are among the corporate insiders to have sold $19bn-worth of shares in their firms and are on track to reach $26bn this year – the most since 2000, reported Richard Henderson in the Financial Times.

Why does this matter?

With the S&P 500 having risen by almost a fifth this year already, executives are taking advantage of sky-high stock prices. However, as insider selling levels are set to reach a 20-year high, that raises questions over how confident boardroom members are in their firms. WeWork’s former CEO Adam Neumann drew criticism for selling $700m worth of stock before its now-suspended IPO.

Lateral thought from Curation: 

Much of the uncertainty has been blamed on the ongoing trade war’s potential to cause a recession, but the big unknown is how a wider push for sustainability will affect corporate earnings. At the end of August, 181 CEOs of The Business Roundtable pledged to value stakeholders and shareholders alike. Walmart CEO Doug McMillon was one of those business leaders, but the firm’s founders, the Walton family, have sold $2.2bn of their stock this year, seemingly at odds with the mission statement.

We have mentioned previously how firms with greater diversity and better climate change policies outperform others. It remains to be seen how widespread sustainability measures, such as taxing frequent flyers, that potentially reduce consumption, affect growth and profits — and, consequently, the actions and behaviours of board members.

Further reading: 

Nick Finegold is Founder & CEO of Curation Corp, an emerging and peripheral risks monitoring service.

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