INSIDER BUYING DROPS TO LOWEST LEVELS IN A YEAR

As the recession on Main Street continues the negative trends in insider buying get even worse.  Insider buying fell to a new low of $7.8MM on the week.  Selling dropped from $318MM to $293.22MM, but remains at very high levels.  I continue to believe this is a reflection of the ongoing secular bear market as corporate insiders see little to no real recovery in revenues and sustainable organic growth.  Due to this, they have little to no faith in the long-term sustainability of future increases in their own corporation’s stock prices.  This is best reflected in the incredibly lopsided insider transactions.

Notable selling:

Notable buying:

Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.

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  • Rob

    TPC,

    Do you have insider buy/sell statistics from 2000, 2007, 2008? I have read that insider buying/selling is a lousy indicator of short to medium term stock moves, as are share buybacks. Moves in share prices have a lot to do with overall market sentiment and overall economic direction. Insiders buy a lot near the top if they think their company is doing well and may sell near the bottom if things look bleak or if they just have some options to cash in and need the money now or want to diversify out of their company and buy other investments. Diversification may explain a great deal of the low insider buying and big shift to bond funds and out of stock funds throughout the rally. Many insiders probably hadn’t learned a lesson from Enron and Worldcom and were woken up by the fate of Lehman employees. Retail investors were overallocated to stocks and real estate and underallocated to bonds. (Almost everyone I know had close to 100% of their 401K in stock funds in 2008.)

    Share buybacks (another story) were very high in 2007 and very low in 2009 thereby destroying shareholder value.

    Am I misinformed?

  • http://www.choose-your-accountant.co.uk chris

    rob – great questions. You actually have to go to the original source websites for this info, and take a screen shot of this info to store for your latet use.

  • http://www.pragcap.com TPC

    That’s correct Rob. Unfortunately, I don’t have this data documented going back to 2000, but I can recall from personal memory that the buying is unusually low right now.