Tuesday, December 18, 2012

How a stock trade's timing cost Dickey $62,000

Timing is everything when it comes to trading stock, a fact underscored last week when U.S. newspaper division President Bob Dickey sold more than $1 million worth of Gannett shares.

The trade, which I haven't reported until now, involved 62,225 options he held on GCI that he received in early 2009 as part of his annual pay the previous year, according to this regulatory notice.

Options let recipients buy stock from their employer at a fixed price -- the "strike price" -- no matter how high shares trade on the broader market. They typically come with restrictions on how long the holder must keep the options before they can be exercised.

For Dickey, and other executives who got options that year, the strike price he paid last week was $3.75 a share, or $233,344 for the lot. He immediately sold them for an average $17.83 a share, or $1.1 million, for a pre-tax profit of $876,000.

Since then, however, GCI's stock has jumped as high as $18.89 a share today, meaning Dickey left more than $62,000 on the table. [Updated at 4:21 p.m. ET: GCI closed at $18.66, up 3.4% on a day when stocks overall rallied.]

Why'd he sell when he did? 
The notice to the U.S. Securities and Exchange Commission didn't say; they almost never do.

Generally, though, investors sell when they think a stock isn't going to move much higher, or when they need to raise cash for other purposes. Recently, many high-income investors have been selling stock to beat an increase in capital gains tax rates, which are likely going to rise on Jan. 1 for the wealthiest Americans -- about 2% of the population.

Very rarely, investors detail why they're selling, which was the case with CEO Gracia Martore. She sold 75,000 shares as Dickey was trading -- just enough to cover the taxes and other expenses on 150,000 options she also got in 2009.

Martore transferred the other 75,000 shares to a family trust she didn't identify.

She sold her shares at an average $17.73 each, which means that she, too, left beaucoup bucks behind: More than $75,000.


  1. Trying to figure out what the point of this post was.

    1. Jim is still trying to figure out what the point was. I think it came down to his Norquist-like pledge that he would report something about this transaction. He must have believed he had some big scoop.

  2. I just hate it when I leave $62,000 on the table.

  3. Slow news day.


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