For Whom The Bell Tolls.....

It’s long been known that insiders know when to sell and when to buy. There’s nothing illegal. The only issue becomes if they sell before an important announcement. But there is no law that says they have to own stock in their company. Traders will even watch insider’s buys and sells for ideas. Was anyone watching Toll Brothers (NYSE: TOL)?

Toll Brothers is known for their luxury homes or in some neighborhoods – McMansions. They’ve become synonymous with the housing boom that took hold of the country. Who better to know how the housing market is doing than the guys building the houses?

Robert Toll and his brother Bruce started selling their stock at the end of November 2004 and September 2005. Together they’ve sold almost $470 million at an average price of $43.00 a share. When you look at the stock chart, they sold as the shares were climbing.

The stock peaked in July of 2005 at about $55 a share and then took a dive to the $20’s, hitting its lows in July of 2006. The brothers began to sell again as the stock started to rise. Beginning in September Bruce Toll cashed out $47 million more stock.

Did shareholders even notice? Robert Toll also received a $17.5 million bonus last year. To be fair, Robert Toll still owns 16 million shares and is the largest shareholder. But he continues to sell, having just sold another 200,000 shares in January. However, Bruce Toll only owns 2,300 shares.

A review of all the recent insider trading shows all sell orders and no buy orders. So why would Goldman Sachs and Bank of America upgrade this stock and tell investors to buy? The owners aren’t even buying it. The bell tolls for the investors buying this stock.