Hartcourt Companies (fka HRCT)

[Investorman]

No, I don't think all the shares filed on will have to be sold. No, I haven't ever owned a stock where inside sellers notified shareholders of what they were selling which is why the SEC passed rule 144. My definition of a lot of selling would be when a significant number of the insiders eligible to sell file to do so. As for the total number of shares it depends on how much they own. The shares represented by these filings represent a significant portion of the total number of HRCT's outstanding shares and an even greater percentage of those shares owned by insiders that are not locked up in a restricted state.

If I owned a stock that had 10 insiders selling even 1 million shares of a company with 200 million shares outstanding, it would be of concern to me. The key is not the percentage of total outstanding shares but the percentage of the shares they own. In HRCT's case it looks like these guys are filing to sell almost all, if not all, of the shares they hold.

If insiders are taking profits off the table you have to ask why. Don't they think they will make a lot more by holding for a while? They are on the inside and have access to information that we don't. If they thought the price would jump based on a significant increase in reported earnings or a listing on a major exchange, wouldn't they hold for a while longer? Widespread insider selling is seldom a non event but if you hold long enough, all things pass.