John Malone’s insider trading

I’ve been trying to figure out why Malone sold shares of LMCA a few days ago.  (I don’t have a great answer.)  A year ago he bought a smaller number of shares in LMCA at prices very similar to his recent sale.

Note that you should not necessarily read too much into Malone’s insider trading.  In the market panic of 2008/9, you should have bought Liberty Capital (to make several times your money) despite Malone’s massive insider selling (due to a suspected margin call).  Some of his trades represent an immaterial portion of his overall stake in that particular company.  He may be simply “painting the tape” in the hopes that other people read too much into insider trading.

Here is a compilation of John Malone’s insider trading based on his SEC filings.

In general, he has sold shares (with low voting power) in every company that he owns: LMCA, STRZA, LBTYK, ASCMA, LINTA, LVNTA, and DISCK.

July 29, 2014 – Sold 65,156 shares of LMCA at $48.5927.  Sold 134,258 shares of LMCK at $47.1722.  Equivalent to selling LMCA at $142.94 before 2 shares of LMCK were distributed for every share of LMCA.  Proceeds of $9.5M.

June 24, 2014 – Sold 74,890 shares of LMCA at $133.5315.  Proceeds of $10M.

June 2, 2014 – Sold 100,000 shares of LBTYK (class C, non-voting) at $43.157.  Proceeds of $4.3M.

May 13, 2014 – Sold 100,000 shares of LBTYK at $41.7782.  Proceeds of $4.2M.

February 18, 2014 – Entered into agreements with the CEO of Discovery/DISCA (David Zaslav) and Liberty Global (Michael T. Fries), granting them voting and purchase rights to Malone’s supervoting B shares.  This suggests to me that Malone thinks highly of their skills as business operators, has no intention of ever replacing them, and really likes them.  Greg Maffei and Michael George (CEO of QVC but not Interactive/Ventures) did not get such deals.

Dec 23, 2013 – Swapped 745,816 shares of LMCA for 678,015 shares of LMCB with Robert Bennett (and his wife).

November 26, 2013 – Exercised options for 331,332 shares of LINTA early (May 29, 2014 expiration, strike price $21.84).  Disposed 289,295 shares at $27.6.  I presume that the shares disposed paid for both exercising the options (cashless) and taxes.
November 26, 2013 – Exercised options for 16,583 shares of LVNTA early (May 29, 2014 expiration, strike price $56.91).  Disposed 11,927 shares at $120 (cashless exercise).

October 25, 2013 – Sold 351,734 shares of ASCMA at $93.  He basically sold half of all shares owned by his family (himself, wife, daughter, son).  After the sale, his family owned 351,734 shares.  Proceeds of $32.7M.

July 8 and 9, 2013 – Sold 134,000 shares of DISCK (class C, non-voting) at an average price of $75.29 for proceeds of $10.1M.

July 8, 2013 – Sold 341,000 shares of LINTA at an average price of $23.2509.  Proceeds of $7.9MSold 57,000 shares of LVNTA at an average price of $89.92.  Proceeds of $5.125M.  Adjusted for the 2:1 split, the shares were sold at an average price of $44.96/share.

July 8 and 9, 2013 – Sold 160,000 shares of LBTYK at an average price of $75.66 for proceeds of $12.1M.

July 8 and 9, 2013 – Sold 204,000 shares of STRZA at an average price of $24.36 for proceeds of $5M.

June 19, 2013 – Bought 15,458 shares of LMCA at a price of $129.37 (may be a private purchase???).  $2.0M in total.

June 7, 2013 – “entered into a long-dated post-paid variable forward sale contract with an unaffiliated counterparty relating to a maximum of 1,100,000 shares of Liberty Global Inc.’s Series C common stock, divided into 20 equal components that mature on sequential trading days over the period beginning on August 17, 2017 and ending on September 14, 2017″ (form 4)

November 2, 2012 – Gave 17,750 shares of DISCK as a “bona fide gift”.

December 17, 2012 – Exercised deep-in-the-money options for 167,459 shares of LINTA early (December 16, 2015 expiration, strike price $2.65).  Disposed 82,383 shares at $19.24 (cashless exercise).
Exercised deep-in-the-money options for 8,370 shares of LVNTA early (December 16, 2015 expiration, strike price $6.89).  Disposed 3.982 shares at $62.57 (cashless exercise).

December 17, 2012 – Exercised deep-in-the-money options for 41,721 shares of series A Liberty Capital early (December 16, 2015 expiration, strike price $3.57).  Exercised options for 15,133 shares (same expiration, $29.54 strike price).
689 shares of LCAPA were disposed at $112.62 in a cashless exercise.
26,440 shares of LCAPA were disposed at $113.92 in a cashless exercise.
Liberty Capital (LCAPA) would later distribute shares of DTV and split into STRZA and LMCA.October 1 to December 13, 2012 – Bought several million dollars of ASCMA shares.  The share purchases are described over multiple filings.

*Dates refer to the transaction date, not the SEC filing date.
**I chose not to go further back in time.
***In the future I may update this post with more of Malone’s insider trading.

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6 thoughts on “John Malone’s insider trading

  1. Liberty Broadband has a rights offering coming up; I suspect Malone would want to fully exercise his rights.

    “The subscription rights are being issued to raise capital for general corporate purposes of the Liberty Broadband Group, including investment in new business opportunities to be attributed to that group. The subscription rights will:

    • Enable the holders to acquire shares of the applicable series of Liberty Broadband tracking stock at a 20% discount to the 20-trading day volume weighted average trading price of Liberty Broadband tracking stock following the closing of the Distribution.

    • Become publicly traded, once the exercise price has been established.

    • Expire forty trading days following the closing of the Distribution.”

    http://ir.libertymedia.com/releasedetail.cfm?ReleaseID=832655

    • Sure. But he could have sold something else. If he hasn’t sold his DTV shares by now, he’s probably selling them now. I think he’s just messing around because the trade isn’t that material to him. It’s a very, very small trade.

  2. Hi Glenn,

    First, thanks for the great blog. I`m enjoying it a lot.

    Several investors reading your blog are very interested
    in the Liberty Broadband spin off. I am too. I am trying to gather
    as much meaningful info. as possible prior to spin.

    Could you clarify what you mean by “messing around”?

    You may be surprised how many people look at online commentary
    and point it up to their bosses. This is sometimes how bloggers land jobs.

    • 1- I don’t know if it makes too much sense to pay attention to spinoffs. Had you simply bought and held Malone stocks, you likely would have done incredibly well (except perhaps for the AT&T period). You would have done a little better if you had adjusted your ownership to mirror Malone’s (depending on when you sold DTV or if you collared it with derivatives or if you bought puts on it). And if you have to pay capital gains tax, I suspect that a strategy that is mostly buy and hold is by far the best strategy. I don’t think that there will be spinoff shenanigans on the same level as the one described in Joel Greenblatt’s special situations book. That was a one-time thing that will likely never happen again (I suspect that regulators nowadays will not allow it).

      That being said, being overweight the Liberty Broadband spin off may not be a bad idea. There may be hidden value in True Position that Wall Street doesn’t understand.

      2- Malone has made a lot of small trades that don’t necessarily make a lot of sense. Many of his trades are (A) insignificant and (B) the opposite of what you should have done. So you could make an argument that he is messing around.

  3. Thank you, Glenn. That`s very helpful.

    I think the Liberty Broadband spinoff may be a good one
    to buy and hold. I expect Liberty Broadband to be merged
    with Charter down the road.

    I also hope the True Position inclusion will muddy the analytical waters
    to deter some buyers.

  4. Pingback: Liberty Global Inc. (LBTYA/LBTYK) - Increasing FCF

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