Why Is Dish Exec. Selling Stock?

[SQUEEZON]

Its kind of interesting to watch Mr.James DeFranco sell his stock all year. By my count he has sold almost $28Million, which of course he is entitled to do. But thats an awful lot of money. No doubt he is selling his pioneer stock most likely purchased at $4-$8.00 a share.
DISH NETWORK CORP (DISH): Form 4 Insider Trading History: InsiderInsights.com

 

[mike123abc]

It is always a smart move. He has been selling in blocks for a few years. If you have all your money in one company you could lose it all if something happens to that company. He probably just invests it in other things to diversify.

 

[Dah-Henny]

Dump it, preferably before Q3 stats are made public.

 

[DishSubLA]

Keep in mind that Echostar being a very small company, has relatively low salaries for its executives (and one of the co-founders would still draw a relatively modest salary) and uses stock in the company to compensate. Remember, similar, but much larger companies pay the top executives about $28-$34 million per year! He most likely can only sell it at specified periods, so it sounds more like DeFranco is getting what is due to him if he were at a larger company or he wants to add on to the house .

 

[meStevo]

Keep in mind there are tons of rules about selling stock and it can bought and sold as an insider during certain windows.

Edit: what DishSubLA said.

 

[navychop]

Routine business for lots of companies.

 

[KAB]

Because he wants his money in his hand , not on paper. What is so hard to understand about that???

 

[navychop]

I'd spend my children's inheritance. If they had any!

 

[yaz96]

Because he wants his money in his hand , not on paper. What is so hard to understand about that???

This.

 

[navychop]

This.

??? Missing link?

 

[bookworm370]

Sorry you're all missing it.

If you look at all the large company execs there is a stand still period at the end of the year or before announcements that prevent them from selling.

The Bush tax cuts on long term capital gains expire this year. Selling stock that has a gain will be taxed at your normal tax rate this year. Next year it will revert to the higher long term capital gain rate which can cost people millions. I am also an executive with a (not quite so large, but large company) and my CPA has me also selling my stock holdings in multiple companies.

This is not because anyone is greedy (unless you consider saving tax greedy) but the net effect of the lunacy of the congress not renewing the tax cuts will simply make the market tank at the end of this year as anyone with any reasonable equity dumps out to get the lower tax rate.

The strategy would be to sell now at 'say' $100/share and buy back the same share amounts when the market next January is at $65/share because of the dumping. End result, I and Jim still have the same amount of shares, saved the taxes and someone bought my shares at $100 but because there is so much float on the shares the demand goes down and the share prices plummet.

If you don't believe me look at the CNBC and Forbes stories of today and yesterday of multiple executives at Oracle, Apple, Microsoft, GE, Sony, etc, all inside trading all now selling their stock right after their 3rd quarter earnings results and therefor not covered by the stand still policy the prevents insiders from selling stock when they know information not available to the general public. So, at this time Jim and everyone else does not know anything special so he's allowed to sell his stock, the the profits, take the tax advantages and then rebuy it next year.

So compared to Apple, Oracle, IBM, Microsoft, trust me Dish is small potatoes.

And to the topic, why is a Dish Exec selling his stock? Because the government is forcing him to do so as the only viable financial decision he can make right now.

Savvy?

Also, it just doesn't apply to insiders, anyone that has long term big gains should look to do the same. Don't take my word for it, talk to your accountant or bartender!

B

 

[Zero327]

Daaaaaaaaamn. This is like Finance 4010. It's a simple concept, but I don't think half the forum will understand the concept, even in those simple terms. Nice explain though.

 

[bookworm370]

Thanks,

I agree with you, you really don't know who you are talking to on the net. Sometimes you make the mistake of thinking you are talking to a peer when it's a 16 yr old on the other side (aka iPhone developer that think they know everything in the world (LOL)). After seeing a few 'there must be a problem at Dish' posts I knew this was going the wrong way with people just drawing inaccurate conclusions with no fact. So I thought I'd spend a few minutes while the wife was not bothering me (did I say that?) to explain it.

If you also look at some of the stock trades, you'll see a lot of people doing 'sell/rebuys' in a row. The idea is that you sell at $xx and buy at ($yy-(commissionAtSell+commissionAtBuy)). So if you sold at $100 and it cost you $1 in commission, you'll set a buy order when the stock hits $98. That way you've covered your commission when the stock goes back to $100 but you've also triggered the 'sell' side of the gains tax calculation. The good thing about doing it this way is that your basis on the stock that you had that used to be something like $5 (in the case of DeFranco) is now set at $98 for any future trades at the higher tax rate so you don't get shafted even bigger later on. And, if the stock does go down, you still have the same amount of shares you had even before you did they sell/buy but now, if you sell it you can claim a 'loss' on your return!

E.G. If you had a basis of $5 and the stock dropped to $80 next year and you sold it you would still have a capital gain next year at a higher rate even though it went down.
If you did the sell/buy this year, you pay the taxes at the lower rate and reset your basis to $98. Now, if the stock goes down to $80 next year and you sell, guess what, you just took a $18/share 'LOSS' on the stock (remember, same stock) and can get a refund on your taxes! Isn't our government the best thing since sliced bread!!!!

Ok, does that one qualify for Finance 4101?

Daaaaaaaaamn. This is like Finance 4010. It's a simple concept, but I don't think half the forum will understand the concept, even in those simple terms. Nice explain though.

 

[Scott Greczkowski]

Besides if you look at his history, he seems to cash out some shares every year at this time.

He worked hard for it, I say good for him.

 

[bookworm370]

Yup, he's not getting any younger. Every time I see him on the Chat he has more gray hair and other than the mustache I think I'm looking into a mirror! (eakkk!)
What good will that money do him and his family if it's not real money. But I'm sure we'll see re-buys in his future or a contract renewal options or outright grants by E*.

 

[Scott Greczkowski]

When I see him I call him Super Mario.

Give him some red overalls and the hat and hes fits the part perfectly.

 

[bookworm370]

I'll never watch another Chat again without a grin on my face, you've ruined it forever for me!!!

 

[navychop]

Gray hair is better than no hair.

Thanks for reminding us, bookworm.

 

[DishSubLA]

Because he wants his money in his hand , not on paper. What is so hard to understand about that???

Well put!

 

[Redwoodman]

Possibly because the Bush tax cuts expire at the end of this year and the Long Term Capital Gains tax rate goes from 15% to 20%.

Smart move Jim!

G