Insider selling is rarely a positive sign for a company.

At best, it's a neutral event: An officer, director, or existing shareholder deciding to diversify his or her risk and trimming exposure to the company.

At worst, it's a sign that insiders are nervous about the future of the company and want to get out before the stock price drops.

Eyebrows were therefore immediately raised when news broke that Peter Thiel, Facebook's (FB) earliest institutional investor, sold the vast majority of his stake in the company last week, as soon as the first insider lockup expired.

Like other Facebook insiders, Thiel had already sold on the IPO: He sold 16.8 million shares at $38 a share for $638 million.

Then, last week, Thiel sold an additional 20 million shares for about $400 million, at a share price that was down by almost half from the IPO price.

Thiel has been a Facebook investor for eight years now, so it's not surprising that he wanted liquidity. It's also not surprising that he would want to diversify a holding that had been such a spectacular investment that that it had transformed $500,000 into more than $1 billion.