In the wake of a buying spree that has sent stocks jumping 50% from their early March lows, company insiders have been running the opposite way, selling shares at a pace not seen in 2 ½ years.

The increase in selling volume by company executives and large shareholders has given some investors concern that some executives may now feel their own companies' stocks are overpriced, or that the top brass may not be very confident in the economy going forward.
According to data provided by Insiderscore.com, a firm that tracks insider buying and selling, insider selling jumped in August to its highest level since February 2007.
People who watch insider trading say it can be a good gauge of when to enter and exit a stock. Insider buying was near a high at the time of the early March lows, and this recent wave of selling reflects what traders say is a stock market getting ahead of itself.
Not all insider selling should be taken as a bearish signal. Some executives with large stock- and option-based compensation participate in what’s known as “Rule 10b5-1” programs, which is when executives disclose a plan to sell a certain number of shares over a period of time. Ben Silverman with Insiderscore.com said that for some company insiders “stocks are hitting valuation inflection points” when it seems appropriate for executives to take stock off the table.
Two firms that have gotten close attention in recent weeks for insider selling are videogame giant Activision Blizzard (ATVI) and home builder Toll Brothers (TOLL). Both firms have seen waves of selling from the companies’ CEOs and chairmen -- some based on programmed selling, some not. 
Activision and Toll are just two examples of a wave of selling that has happened in nearly all industries.
At Toll Brothers, Chairman and CEO Robert Toll exercised options on 1.5 million shares at $4.38 and sold 1.5 million shares at $21.84 the week of Sept 16 -- bringing his total share sale this year to 3.63 million shares.  At the same, Robert’s brother and company director Bruce Toll sold about 350,000 shares last week for pretax proceeds of about $7.5 million.
While Robert Toll had stated in a 10b5-1 plan that he planned to sell shares this year, the 3.63 million he sold was more than the 3 million the plan said he expected to do so. According to data by insiderscore.com, Robert Toll has sold more shares this year than since 2005 -- at the height of the housing bubble. “We think he and his brother are making a valuation call here and that it’s backed up by,” the housing market figures as of late, said Silverman.
Executives at Activision-Blizzard have also been selling shares in the company. Activision CEO Bobby Kotick has sold $66.4 million of stock this year, most of it related to programmed or option selling the CEO has already disclosed. Vice Chairman Brian Kelly has also sold $212.3 million in stocks and options this year, more than what he had disclosed in regulatory filings -- an act that Silverman called “disturbing.”
Daniel Morgan, fund manager with Synovus Trust Company, said insider selling is not as influential in his investing decisions as it used to be pre-Enron and WorldCom.
“For me, it’s a check point in how I decide where to invest or not, but it doesn’t stop me if I believe in the company,” Morgan said.
One reason why Morgan said he doesn’t watch it as closely as he used to is that the Securities and Exchange Commission tends to watch insider selling fairly closely. For example, former CEO of Countrywide Financial Angelo Mozilo was charged by the SEC with insider trading, despite being a part of a 10b5-1 plan. “If top management is starting to sell shares, they’re going to get a call,” Morgan said.
(Source: Foxbusiness)