eBay's Whitman Ringing Up the Sales

In their long-running love affair with eBay (EBAY), investors may have overlooked one important growth area: The amount of stock being sold by CEO Meg Whitman.

The company's swift expansion has made it something of a throwback to the tech boom of the late '90s. Sales rose 89% last year, while margins came in at a lush 80%. The stock has more than held its ground in a sinking market, rising 37% in a year and hovering near a 52-week high this week.

But squinting through the glare of eBay's shining financial performance, some observers have turned a skeptical eye to another set of numbers: Whitman's Securities and Exchange Commission filings.

While Wall Street has been buying eBay by the truckload -- driving the stock to a valuation that makes some money managers squeamish -- Whitman has been selling it in big clumps. Through an investment vehicle called Sweetwater Trust, named after a family farm in Tennessee, Whitman has raked in a cool $104 million in eBay stock sales over the past year.

While stock sales by a top executive hardly qualify as scandalous, they do send a curious signal to investors who have been buying in large part on the promise of continued good fortune at the San Jose, Calif.-based company.

"I'd say that's not a good sign, especially if it's true that they are still early in their growth stages," says Ken Winston, a money manager with Lee Munder Capital Group in Boston who has no eBay positions.

Standing Out

An eBay spokesman downplayed Whitman's deals. "This is normal selling activity for estate planning and diversification purposes," says eBay spokesman Kevin Pursglove. He adds that Whitman's sales were similar to those done by other eBay executives.

But according to SEC filings and research by Thomson Financial/First Call, the volume of Whitman's selling makes her stand out among eBay's top shareholders. Indeed, Whitman sold eight times as many shares as the company's top two individual investors in the last year.