Inside Scoop/Barron’s

 | WEDNESDAY, SEPTEMBER 29, 2010

Larry Ellison's $217 Million Oracle Stock Sale

By AVI SALZMAN | MORE ARTICLES BY AUTHOR

The CEO sold eight million shares of the software giant.

SINCE GIVING FORMER Hewlett-Packard Chief Executive Mark Hurd a job as president and posting strong quarterly earnings, Oracle has been one of the hottest companies in Silicon Valley. With shares on a big run over the past two weeks, selling by insiders at the company has increased considerably.

Chief Executive Officer Lawrence J. Ellison has led the selling, disposing of eight million Oracle (ticker: ORCL) shares over the past week and a half for $217 million. That translates into an average per-share price of $27.10. Ellison sold through a prearranged selling plan adopted on April 22, and it's unclear what exactly triggered the sale.

Oracle declined to comment on the sales.

Ellison's selling began after the shares rose above $27 for the first time since he adopted the plan.

"It does appear Mr. Ellison has a trigger point of $26.50 or $27, and I do find that interesting information," says Jonathan Moreland, research director at InsiderInsights.com.

Moreland notes that Ellison exercised options for 10 million shares last April, and apparently waited a year before establishing a selling plan to get rid of them. That would allow him to sell at a more favorable tax rate, paying long-term capital-gains rates.

"The selling looks like the tail end of a smart tax move," says Moreland.

Ellison, who last sold shares in February 2008, still owns about 1.18 billion shares, or about 23% of the company. At Wednesday's closing price of $27.17, his stake was worth about $32 billion. Ellison ranked third on this year's Forbes 400 list of the richest Americans, after Bill Gates and Warren Buffett.

Other Oracle insiders have also stepped up their selling in the past few weeks. In fact, in the last month, Oracle insiders have sold $304 million in stock, including Ellison's sales -- that's equivalent to how much they've sold in the previous 11 months combined ($313 million), according to data from InsiderScore.com. Among the other top sellers were executive vice president Thomas Kurian, who sold $34 million in shares after exercising options, and President Safra Catz, who sold $20 million in stock through a prearranged selling plan. Kurian's sales represented about a quarter of his total holdings, including exercisable options.

"I think Oracle tilts negative [in terms of its insider sentiment] because I do see insiders other than Ellison accelerating their options-related sales into the price jump," Moreland says.

Oracle's share price is up 18% since the company announced that Hurd would join them, following his ouster from Hewlett-Packard (HPQ) earlier this year. The company got a further boost after posting strong fiscal-first-quarter earnings on Sept. 16.