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Science

Moderna Shares Tumble As Insiders Caught Running For The Exits

2020-05-28

*Shrug* A lesson in the difference between stock speculators and long term investors. According to Forbes, Moderna is continuing steadily down the clinical testing path, but the stock price has been volatile. It should be noted that even after falling 40% from peak, the stock price is still more than twice the initial price offering of $22.

[Zero Hedge] In his classic book "the Intelligent Investor", Benjamin Graham, considered the founder of value investing, warned readers that evidence of company insiders and management selling large slugs of shares should be an immediate red flag for the discerning investor. If management seems more interested in cashing out than running the company, then they're likely prioritizing their own financial interests over the long-term viability of the company.

A little over a week ago, shares of American biotech stock Moderna soared more than 30% following a bullish statement on the company's vaccine results. A few days later, CNN reported that company insiders, including the company's chief medical officer and chief financial officer, cashed out some $30 million in options. CEO Stephane Bancel has also cashed out enough Moderna shares to cement his status as a billionaire.

The high-flying biotech stock was forced to reckon with the confidence-draining impact of insider sales when StatNews reported on Wednesday that insiders have sold more than $89 million in stock so far this year. Statnews didn't say where it obtained this info; that $89 million number is larger than the sales that have already been disclosed to the SEC.

Of course, insiders aren't the only ones cashing out: the White House's "Vaccine Czar" - formerly a board member at Moderna, which is working closely with the NIH - finally acquiesced to critics who insisted he should sell all of his Moderna options to avoid the appearance of a conflict. Of course, with the sales coming just hours after the stock's face-melting rally, the former big pharma exec pocketed ~$12 million.

The news, which follows a secondary offering by Moderna last week seemingly timed to take advantage of the rally, sent Moderna shares down 6.8% in premarket trading on Wednesday.

Posted by:Clem

#5

More to the story
Sure, the timing of the Moderna executives' stock sales seems like the company's leaders were attempting to profit off of good news in anticipation that the stock could soon go down. But appearances can be deceiving.

All of the stock sales in question were done using a Rule 10b5-1 trading plan. What is Rule 10b5-1? The Securities and Exchange Commission (SEC) established this rule in 2000 to allow company insiders to put trading plans into effect that buy or sell a predetermined number of shares at a predetermined time. The SEC actually adopted Rule 10b5-1 to enable insiders to trade shares without engaging in insider trading.

They just got damn lucky on when the timer went off and sold those shares.

Posted by: bbrewer126 2020-05-28 21:06

#4 Yep...posted that story as well.

Posted by: Clem 2020-05-28 14:57

#3 Much like Hertz.

Posted by: Skidmark 2020-05-28 14:54

#2 This is one of those deals where the optics are bad, but, like it or not, that's how the game is played. Options are very often part of C-Suite's compensation package. A little bit different than when United Airlines execs got bonuses when the rank and file took pay cuts to "save the company"

Posted by: Clem 2020-05-28 07:35

#1 There's profit taking and rebalancing.

If they sold ALL their stocks maybe that would be more worrying, but diversifying on a gain seems prudent to me.

Posted by: Bright Pebbles 2020-05-28 05:12

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