Paul Hodgson: Share trading by US executives spikes in March

Filings show activity at highest level for 15 years

A review of companies’ financial filings at the SEC has revealed a spike in dealing by top executives at US corporations during March.

Exceptional numbers of Form 4 – the form on which company insiders, directors and officers must file their stock trades – were filed.

Some outstanding numbers include pharmaceutical company Pfizer, with 19 filed during March, coatings manufacturer PPG Industries (21), Zoom, the video conference firm (20), while the highest number observed was at aerospace giant Boeing, with 26.

Form 4s are filed for any kind of stock transaction, acquisitions or sales, so this quantity of filings does not necessarily imply a massive sell-off by insiders prior to the market crash.

Indeed, many of the filings are standard trades, such as the shares withheld for tax on previously exercised SARs (stock appreciation rights) for some officers at Pfizer, and the purchase of stock units by Randall Stephenson, CEO at telecom giant AT&T.

Others record sales according to pre-arranged schedules – commonly known as Rule 10b5-1 trading plan after the rule exception that allows insiders to sell stock without the intimation of insider dealing – such as by Janine Pelosi, chief marketing officer at Zoom.

Other Form 4s at Zoom record significant trading, both sales and acquisitions, by several of its private equity owners.

Jackie Cook, head of stewardship research at Morningstar, performed an analysis of the filings for RI which showed that the number of Form 4 filings is higher this March than in any other March during the last 15 years.

This year has seen the largest number of Form 4s filed in any year, 20,507 up to and including March 24.

The figure shows a statistically significant 10% increase over the five-year average from 2015 to 2019 of 18,574.

Form 4 filings broke 19,000 in March only twice over the last 15 years, but both were in the last five years, in 2015 and 2017, though not by a large margin.

This year is the first time there have been more than 20,000. The flood of filings was not seen at every company observed, however. At banking group Regions Financial and at oil and gas explorer Concho Resources, no Form 4s were filed during March at all.

Cook also pointed out that fewer Form 4s were filed in January this year, 7% down on the previous five-year average.