Insiders at some of the hottest private and publicly traded internet companies unloaded substantial personal stakes ahead of the slump in tech stocks that started at the beginning of March. The selling has stirred unease among some investors, who see the sales as opportunistic moves revealing a lack of confidence in their companies’ stock prices as shares in the fastest-growing internet companies soared in 2013.  Selling by founders and other insiders at private companies – taking advantage of a bubble in valuations in start-ups thought to be close to launching an initial public offering – raises some of the biggest concerns, according to investors. “Individuals selling before going public is always a bad sign,” said Mr Sebastian Thomas, a portfolio manager at Allianz Global Investors.

“If you believe in the business, why would you take out money at what is presumably a lower valuation in the private market?” As the lock-ups which prevented insider sales after their 2012 IPOs expired, executives and directors at companies such as WorkdayService Now and Splunk have sold steadily, raising almost $750m between them over the past 12 months. Shares in these so-called “software as a service” companies, which sell online access to software applications running in their own data centres, have fallen 30-45 per cent from peaks hit six weeks ago. “It was a great deal for them – they took advantage of a big run-up,” said one tech investor. Many of the sales were made through pre-arranged stock trading plans that spread disposals over a long period of time, so that corporate insiders have no discretion over the timing of individual transactions. Also, the slump in tech stocks has in many cases only wiped out the gains of the past six months, leaving share prices still above the levels at which insiders were selling for much of last year. More