Unbelievable… I randomly landed on UPST SEC filing page… I found this… I could not believe this…
CTO Paul Gu, the AI Wizard, has been filing form 4 showing 10K options converting into shares each on July 13 and July 14… at exercise price of $2.15
What does this mean - for Paul, this means he is converting options into shares at current price so he can benefit from long term capital gain on appreciation from current price (of ~$113).
This is very rare - even rarer than ASAN CEO buying shares in open market few weeks back (that led to doubling of ASAN price).
Reason this is rare is that Paul will have to pay income tax on this asset conversion - he will have to pay regular tax rate (should be highest bucket for him) on ~ $111 per share ($113-$2)as it will count as income… my guess is he will have to pay almost ~$1M in tax for 2021 just for the privilege of holding this 20K shares!!
Unless he is getting some huge tax credit to compensate, he better be damn damn sure that (1) this is the bottom… and (2) share price will appreciate much more in next year plus so he really enjoys that long term capital gains.
And BTW - he did do exact same thing on March 5th which resulted into a bottom in share price ~$55 on March 6th.
For the last hour, I have been on buying binge… depending on how you count it, I built up 15% to 20% position mostly direct shares but also including some call options (and some puts for safety!)
FWIW, my company used to hand out stock options. I don’t know if this is a general rule, but ours expired after 10 years. You had to exercise by then, or you lose them.
Maybe “Paul” was in a similar situation: he had to exercise or lose them.
Might he also have the intent to sell soon? Without knowing his personal situation, might there be other reasons for exercising the options and converting them to shares at this time?
From the link you provided, he converted shares on 2020-12-15 but sold on 2020-12-18. So this time he could also sell several days later. But not sure how this thing work.
Paul Gu may very well believe this is the bottom. Founders are always incredibly optimistic and his short life experience has rewarded him for this belief.
But is he? No one knows.
What we know is everyone thinks the next ER will be fabulous. It very may pop the stock higher. Or not. I personally think shares are prices reasonably right now. And have been adding small amounts at these levels.
FWIW, my company used to hand out stock options. I don’t know if this is a general rule, but ours expired after 10 years. You had to exercise by then, or you lose them.
Maybe “Paul” was in a similar situation: he had to exercise or lose them.
Just a guess.
these options were valid till 2027…
and yes, he sold 200K+ in December…
So may be he will sell these… but only reason he would not sell the same day is that he believes its the bottom… and only reason rationale he would have (this is my guess obviously) is that only only upcoming ER is great, he see much stronger ramp in the business.
Ofcourse, he may just be naive!! but I suspect at his being worth >$40M just based on his UPST holdings, he would have enough of professional accountants telling him tax impact of what he is doing!
…Unless Gu is converting into shares in order to sell them. That is what he did with conversion to 213K shares on 2020-12-15 and sale of them days later. (According to that same link you give.) He has to convert before he sells.
…Unless Gu is converting into shares in order to sell them. That is what he did with conversion to 213K shares on 2020-12-15 and sale of them days later. (According to that same link you give.) He has to convert before he sells.
junkmail2,
This is not quite correct. Remember, IPO lockup was in place so they can’t sell on the open market in December 2020.
Those were shares sold in a prearranged underwriting deal for the IPO. The other cofounders had the same deal. Look at the SEC document itself.
…Unless Gu is converting into shares in order to sell them. That is what he did with conversion to 213K shares on 2020-12-15 and sale of them days later. (According to that same link you give.) He has to convert before he sells.
Just another guess…Maybe he expects a strong quarterly report leading to a big pop on Aug.10.
Then he might sell a bit.
Is it not an SEC requirement to schedule sales weeks/months in advance? I know our executive staff has to file to sell x-amount of shares well in advance, when they have no idea what the price will be. And once committed, they can’t change their minds.
Supposed to prevent insider trading. That’s one reason why I don’t pay much attention to those sorts of trades.
Enough on Paul Gu’s investing. Let’s get back to talking about the company and the fundamentals of its business. LET’S DROP THIS DISCUSSION!
Thanks for your cooperation.
Saul