Jan. 5 (Bloomberg) -- U.S. executives and officers cut purchases of shares in the companies they control by 29 percent in 2003 to an eight-year low, while increasing their stock sales by a third as equity markets rebounded.

Purchases by so-called insiders fell to $1.87 billion, the fourth straight yearly decline, according to the Washington Service, which tracks Securities and Exchange Commission filings. Mexican billionaire Carlos Slim was the biggest buyer, acquiring shares of SBC Communications Inc. Sales jumped 34 percent to $42.6 billion, led by Microsoft Corp. Chairman Bill Gates and Dell Inc. Chief Executive Officer Michael Dell.

Inside buyers and sellers may figure U.S. stocks, which surged in 2003 after three annual declines, have little room to rise, said Joseph Quinlan, chief market strategist for Banc of America Capital Management. Standard & Poor's 500 Index gained 26 percent in 2003, while profits grew an estimated 17 percent.

``They are taking advantage of a bull-market rally after a three-year bear market,'' said Quinlan, whose firm oversees more than $300 billion. ``Some of the valuations are stretched.''

The value of sales has exceeded purchases by at least a 20- to-1 margin for the past eight months. On 11 of the 16 times that happened, the stock market declined six months later, according Lon Gerber, Thomson Financial's director of insider research.

Selling increased for the first time since 2000, when Internet and computer-related stocks pushed the Nasdaq Composite Index to a peak of 5132.52 in March of that year. Insider sales crested that year at $80.1 billion.

The Washington Service figures include filings through Dec. 30.

Paying Attention

Investors say purchases by executives and directors may be a better indicator of a stock's prospects than insider sales. Insiders have many ways to use their money, and buying shares is seen as a sign of confidence. Insiders tend to sell for all sorts of reasons -- to buy a house, diversify investments or because they suspect the stock is near its peak.

Sales by insiders started accelerating in June. In the past eight weeks, the number of sales transactions exceeded buys by a 7.1-to-1 margin, according to the Argus Vickers Weekly Insider Report. The number of sales, on average, exceeds purchases by 2- to-1 to 2.5-to-1. The ratio hadn't topped 7-to-1 until last year, the highest in the 32 years the newsletter has kept data.

``They are selling now because they think stocks are overvalued significantly,'' said David Coleman, editor of the Vickers report.

The Standard & Poor's 500 trades at about 28 times the past year's per-share earnings of its members. While that multiple is less than half its peak of 63 in March 2002, the level exceeds the average multiple of 20 in the first half of the 1990s before the boom in Internet and computer-related stocks.

Profit growth is forecast to slow next year to 13 percent, according to analysts surveyed by Thomson Financial.

SBC, Equity One

Insider buying was led by Slim, chairman of Telefonos de Mexico SA, or Telmex, who spent $111.3 million for 5 million shares of SBC, the second-largest U.S. local telephone company. SBC shares have lost more than half their value since trading at almost $60 in 1999. They have gained 17 percent since Slim, who also is an SBC director, made his purchases.

Slim declined to comment on his SBC stock acquisitions, Telmex spokeswoman Concepcion Rivera said. Slim told Bloomberg Markets magazine last September that telecommunications securities offered an ideal investment opportunity because many investors have shunned the industry, driving down prices.

Another big buyer was Equity One Inc. CEO Chaim Katzman, who also is chairman of the real-estate-investment trust. He acquired 5.9 million shares for $81 million in the North Miami Beach, Florida-based company. Shares of Equity One, which develops shopping centers anchored by supermarkets, have gained 30 percent since Katzman began buying shares at the beginning of 2003.

``We thought it as a very attractive investment,'' Katzman said in an interview. ``We are still bullish on the market -- the real estate market and the market for our company. We felt it was undervalued and we felt very comfortable buying the stock.''

Waste Management Inc. director Ralph Whitworth, invested $57.6 million in the largest U.S. trash hauler last year. Whitworth, principal of Relational Investors LLC, buys shares in poorly performing companies and tries to turn them around. He declined to comment. Shares of Waste Management have risen about 40 percent since his purchases.

Microsoft, Dell

Microsoft's Gates, the world's richest person, sold 64 million shares in the world's largest software maker for $1.67 billion. Gates has a program in which he periodically sells shares to diversify his investments and to make charitable gifts, spokesman Kent Hollenbeck said.

Microsoft CEO Steven Ballmer sold 59.6 million shares for $1.44 billion. In a statement, he said he sold to diversify investments and is ``committed to Microsoft.'' Shares of the Redmond, Washington-based company rose 5.9 percent last year.

Michael Dell sold 53.1 million shares for $1.65 billion, according to the Washington Service. The executive sold shares to diversify his investments and ``remains the largest shareholder in the company,'' spokesman Michael Maher said. Dell holds about 266 million shares, or about 10 percent, of the personal computer maker, according to the research firm. Shares of Round Rock, Texas-based Dell rose 27 percent last year.

Ted Turner, Time Warner Inc.'s former vice chairman, sold 77.2 million shares for $977.8 million. The sales were intended ``to diversify his financial holdings,'' the company said in a statement.

Shares of the world's biggest media company rose 37 percent last year. Before Turner said in January that he would step down as vice chairman, the shares had declined about 70 percent in the two years since America Online Inc. acquired Time Warner Inc. The name was later changed to Time Warner.

Total Annual Values of Insider Purchases and Sales in 2002

          Purchases    Percent          Sales      Percent
Year      (in mlns)    Change         (in mlns)    Change

2003      $1,866.6      -29%          $42,615.1       34%
2002      $2,640.7       -2           $31,825.9      -32
2001      $2,698.8      -49           $46,608.0      -42
2000      $5,280.5       -3           $80,149.7       61
1999      $5,466.5       27           $49,914.7       24
1998      $4,320.7       54           $40,153.9       26
1997      $2,803.3       14           $31,815.3       21
1996      $2,456.3       36           $26,314.2       57
1995      $1,812.6      -10           $16,764.8       33
1994      $2,008.9       -4           $12,598.2      -18
1993      $2,086.3       58           $15,401.2       27
1992      $1,316.6       57           $12,174.6       24
1991        $836.5      -27            $9,805.1      167
1990      $1,143.6       62            $3,667.3       -4
1989        $705.0      -26            $3,828.6       22
1988        $951.1      -43            $3,130.1      -48
1987      $1,671.8      -19            $6,059.0      -44

Source: Washington Service. Figures are as of Dec. 31.

Last Updated: January 5, 2004 00:02 EST