Canopy Growth insiders sell $135M worth of shares

As reported in New Cannabis Ventures published by Alan Brochstein, Canopy Growth (NYSE: CGC) (TSX: WEED) insiders sold $135.2 million worth of shares recently. Eleven insiders including CEO Bruce Linton sold 2,079,975 shares at prices between $64.37 and $65.79 per share. See a complete summary (here).

Many shareholders may wonder if so many insiders selling so many shares means management believes the stock is going to go down. Like with so many things to do with investing in the stock market, it depends. In a small, highly promoted company that is more sizzle than steak, it might mean management is trying to cash in by cashing in their stock often acquired for pennies a share to naïve investors. That’s what “pump and dump” refers to. First your pump and then you dump.

But that is not the case with Canopy Growth that is a real company with rapidly growing operations listed on the Toronto and New York Stock Exchanges. Insiders cannot sell around the time of financial reporting. Or if they are contemplating an acquisition. Or if they have announced an acquisition that hasn’t closed. Or if they have announced a financing that hasn’t closed. For a Canopy Growth, there may be relatively few windows available when insiders can sell. Also, if you think about it, a Canopy insider like Bruce Linton has sold shares from time to time over past couple of years. With the stock at or near all-time highs, Linton would have been better off to never have sold any shares.