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CEO Matt Rubel sold 100,000 shares just days after commenting on the 2Q earnings call that Q2 marked the bottom. Yes, that came as an initial shocker to us on many levels. But the picture becomes far less suspect after a deeper dive.

First off, when Matt Rubel joined PSS in July 2005, his employment contract included an option on 720,000 shares of common stock at $20.93/sh and 214,250 shares of restricted stock. Under the vesting schedule, 120,000 shares were to vest on the 1st and 4th anniversary of the grant, with 240,000 shares on the 2nd and 3rd anniversary.  We just passed the four year lockup. 

Secondly, and perhaps most importantly, check out the chart below. We’re not looking at the most stellar track record of market timing here. Rubel’s last three sales left money on the table as the stock kept grinding higher. In fact, he had a $630k sale immediately before a 100% run in the stock in July 2008.  His best trade was calling the top and selling 25% of his stock in the late summer of 2007 – just as the credit environment melted down, the economy went sour, and the SRR deal turned out to be horribly timed.

THE question here is whether he is again ‘calling the top.’  That answer is No. Say what you want, but the guy has a Macro process. We sat down with him for a couple hrs last month, and walked through the macro call, and how he is aligning the company’s resources to leverage the upside. I’m genuinely not concerned about this sale. Check out our PSS Black Book for more details on our thesis.