Are Heavy Insider Sales a REIT Sell Signal?

Article by David Bodamer Via Retail Traffic

When company insiders sell shares, there may be many reasons that have little to do with the fundamentals of the business or how executives and directors feel about the company's prospects. They may need money to pay taxes, to prepare for retirement or to buy a vacation home.

On the other hand, when there is a pattern of selling across an industry, that makes other investors wonder whether it's time to rethink their own commitment to those companies. This little cloud of doubt has just appeared in the REIT sector, where insiders at dozens of companies have been making abnormally high sales and abnormally low purchases in recent months. In the first quarter, REIT insiders sold $169 million worth of stock while buying $1.1 million. That followed a fourth quarter of 2004 where insiders sold $271 million versus purchases of $33 million, according to data compiled by Lehman Brothers REIT analyst David Harris.

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