In my preceding column, I discussed purchases by insiders and what they can show us about value. I now want to focus on something that most investors tend to ignore - sales by insiders.
Executives in public sell shares all the time. They spread their wealth among various instruments, exercise options that are about to expire, pay taxes, and convert years of stock-based compensation into ready cash. In most cases, these sales have no particular significance; in fact, one of the oldest mistakes in the capital market is assuming that every sale by an insider is necessarily a negative signal.
Because such sales are so common, a change in their pattern could be an excellent source of information. The question is not whether an insider has sold; it’s whether the pattern of his sales has changed.
This question has become especially relevant to investors in Israel. Up until March 18, 2026, foreign private issuers in the US (FPIs), including many Israeli companies, were exempt from reporting insider trades on Form 4 of the US Securities and Exchange Commission (SEC). This meant that investors had almost no way of analyzing in real time patterns of trading in a company's share by its management. Millions of American (and Israeli) investors are exposed to companies in this category. The SEC decided that there was no reason why an investor in an Israeli company should have less information than a corresponding investor in an American one. A large proportion of these reports involve Rule 10b5-1 trading programs.
Many regard such trading as "automated" transactions - or as the capital market calls them, blind sales. While the execution of these transactions is indeed "blind" once the program becomes effective, the decisions that shape it - when the program begins; how many shares will be sold, at what prices, and at what frequency; and when sales will stop - were taken with eyes wide open. The execution of a sale may be automated, but the reasoning that it reflects is certainly not.
Less than a month between sales
The true value of the information does not lie in the fact that an insider made a deal; it lies in an understanding of how and why his behavior changed. The story of Check Point (Nasdaq: CHKP) founder and former CEO Gil Shwed highlights this very clearly. He did not invent a new product, sell the company, or sign a huge deal. You will soon understand what he did do.
In the three years 2017-2019, Shwed was granted 1.3 million options each with a seven-year exercise period and at a wonderfully stable strike price of $114-115. His exercise of his 2017 options and sale of the shares in 2024 was totally expected and the exercise of his 2018 options and share sale in 2025 aroused no questions, but then something changed. On March 7, 2025, the day on which the Check Point’s share price hit $230 at the end of trading, an all-time high, Shwed adopted a new trading program under Rule 10b5-1 (a blind sale program). The interesting feature in this case is what Shwed chose to sell.
Instead of adhering to the pattern of exercising options when their expiration date was approaching, he chose to bring his future sales forward and included in the new program the options due to expire only in 2026, i.e. about a year before he would have had to exercise them.
This poses a simple and obvious question: why did a person who knew Check Point better than anyone else and had no liquidity problems whatsoever choose to sell his exercise his options now and sell the shares instead of waiting another year? When the person with the best knowledge of Check Point's business voluntarily changes the pattern of action he has followed for years, we should at least ask ourselves why.
This, however, is not the whole story. Shwed's Rule 10b5-1 program not only sets the number of shares; it also sets the price and at what frequency they will be sold, as follows:
- Above $215 - sell 150,000 shares a week.
- $200-$215 - sell 120,000 shares a week.
- Below $200 - sell only 80,000 shares a week.
In other words, the priority revealed in the program was quite clear - the closer the share is to $230, the price at the time the plan was devised, the more willing Shwed is to sell a larger number of shares.
The timeline in the program is even more intriguing. SEC rules do not allow two simultaneous Rule 10b5-1 programs, so Shwed had to wait until the previous program (the one under options that expired in 2025 were sold) ended on July 9, 2025. He did not wait even one month; he began executing the new program on July 28, 2025 by exercising options that would expire only in 2026. The first 150,000 shares were therefore sold at an average price of $219.70. On July 30, two days later, Check Point published its second quarter financial statements, following which its share price plunged from $218 to $186 - a 15% drop in one day.
The point is not that Shwed knew how the market would respond to his company's financial statements. The point is that as soon as regulations allowed him to begin selling, he did so immediately.
In retrospect, these decisions acquire additional significance. Check Point’s share price, which was around $190 at the beginning of 2026, plummeted to $112 at the end of April, a fall of over 50% from its $230 peak, which is when Shwed devised his new plan under which he chose to sell the largest number of shares. In retrospect, it is difficult to ignore the financial significance of his decision.
Bringing forward the exercise of the 2026 options, voluntarily foregoing an "entire optional year," gained Shwed $100 million. Had he waited for the options to expire, as he had done with the two preceding series, the options would have been traded very close to their strike price. There is nothing illegitimate here; this is exactly the purpose for which Rule 10b5-1 programs are devised - to enable executives to manage their personal wealth in a transparent legal framework. It was the investors who missed an opportunity.
All the business media in Israel reported that Shwed had exercised his options that expired in 2024 and 2025. Almost no one stopped to ask the really important question of why he chose to bring forward the exercise of options due to expire in 2026, and what had changed. Instead of analyzing the decisions behind these transactions, most investors were typically indifferent to them. The genuine information was hidden in the structure of Shwed's decision-making. The change in behavior is often the story outside the model.
The above should not be regarded as a recommendation or advice, and is no substitute for personal investment consultation that takes into account the needs and situation of each individual.
The author is CEO of SmartLenses, which has developed a platform for understanding trading actions by insiders in public companies in the US, and advises investment managers on identifying unique investment ideas.
Published by Globes, Israel business news - en.globes.co.il - on July 12, 2026.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2026.