Form 4s - Please Read before overreacting
Its been quite awhile since I have posted. Still here, still holding strong. Still think we are under-valued but sometimes stocks don't move when they should, but with enough time they eventually get to where they should be (market can sometimes be irrational for longer than we like)
I did want to address today's form 4s and likely a few others like it that will come so people dont start to attack the timing and overplay the sale.
Aaron was awarded RSUs which 1/3 vest on each year anniversary. The form clearly shows that he was awarded the shares 5/1/2018 so they the first thrid would vest now. When they vest, it means you immediately owe ordinary income taxes (no different than if a cash bonus was received). Most executives and directors would have a plan in place that would have the company automatically sell a set percent of shares that cover taxes and that would be witheld from the sale and paid to the IRS by the company on his behalf. This is one of the few times similar to a 10b-1 plan that you can have a sale regardless of whether there is material info or not as it is set as a rule. Anytime I vest shares or have to exercise options, auto-sell and withhold taxes so I dont get stuck with a tax bill and then not in an open window to sell shares to cover it.
That is why you see he acquired shares and then you see he disposed of a sub-set which should be around 40% or so that is the tax exposure. This is automatic and typical. Aaron didn't decide to randomly sell. He had to have a form 4 update to recognize his vesting of shares and that would auto trigger the corresponding tax sale without any action from him. He didnt pick the day to sell - it is tied to whenever the shares vest. So I would imagine there will be other shares in different months (perhaps based on hire date) that when RSUs vest you will see an offsetting sale. Just like when they have to exercise options. That is very different insider selling than a random sale (when you just see a disposed line but no original acquired line too).
Also people keep pointing that such as such sold all of their shares etc. Keep in mind, we dont see all their shares. They have tons of shares and options that are either time based vesting or milestone based vesting that only show up against them when triggered. So you might think someone had 200K shares and sold all 200K and be like wow. But in reality that person may know they control another 1.2M shares that you wouldn't see and so in their mind they sold 15%. So trying to interpret true intent of insider sales is very tough. Last example - it was clear based on the company RRR modeling that they were more confident than even some of us on the success of the trial - yet many of them sold prior to results (because it is just prudent if you have super material anount of shares and everything tied together) but clearly history showed they weren't bearish so think how many times FFF misinterpreted their selling to mean results would be bad.
