INSIDERS CONTINUE TO INCREASE THEIR BUYING
20 May 2010 by Staff
10 Comments
For the third consecutive week insiders have been buyers of the dip. The 4 week moving average in insider buying jumped to its highest level since March of 2009 as insiders bought $38.4MM in stock. This brings the 4 week trailing average to $20.1. This was still well below the highs seen at the depths of the credit crisis and substantially lower than overall selling which totaled $1.1B. Nonetheless, insiders are clearly a bit more comfortable buying their own shares (albeit in meager amounts).
Source: FinViz
Are insiders a contrarian signal? They were selling all the way up from the bottom. Now they’re buying? If I had bought what they were selling, I would have done great. Maybe now I should reverse that.
buying is a better indicator.
It seems that way, but I think they were buying for slightly different reasons at the end of 2008/start of 2009 and now. At the end of 2008/start of 2009 they had not seen the drop in demand as much as they would later see it and their stocks had plunged more than they had expected. They then saw demand plunge and curtailed their buying all the way through the big run up. Now they’re seeing demand picking up again so they’re buying. The demand is real (well, almost if you don’t consider the amount of government stimulus and easing) so the question is will it last and not get derailed by external factors such as Europe & China. It all seems to be in the hands of governments as it has been for the last year and a half, so if tightening and austerity are the new orders of the day going forward – which it seems to be in Europe, China and even the US, it may not be a good time to buy. Seems to me that given that we’ve gone down the Keynesian deficit spending approach, we need more stimulus and easing now, otherwise we’ll be right back where we were the end of 2008, minus the trillions of $$ (via various programs) we’ve already spent.
If they’re not committed to “whatever it takes” as Geithner put it, then why did they start down this path in the first place.
Hi Pragcap, do you have a chart of insider buying over a longer term period, e.g. 10 or 20 years? Thanks, Ilene
I don’t. Sorry Ilene.
Oh well, I think it would be interesting to see that but don’t know where to find one. Will let you know if I do. Thanks. – Ilene
Insider buying trend is always helpful. However, they’re always early – both on the way up and on the way down. Do not forget they they sold half way through this entire rally. It appears now they are buying ‘half way’ through the downtrend.
The insiders are buying now but where were they when the market was going up? They were selling. Seems to me they are late for the dance on this one.
Keep in mind that many insiders NEVER buy, they just exercise options which I think simply show up as sales. Please correct me if I am wrong on the reporting. I would argue therefore that a vast majority of sales are from insiders who are just using the granted stock as part of their income stream – ie: its dumb money – free stock being cashed in any time. However when you see insiders buying – those are people who are taking a hard look at their company’s prospects and the current stock price and are coming to the conclusion that it is the best place for them to deploy their hard earned capital. Insiders might be below average traders, but at least when you see insider buying you have to know someone was applying thought into spending their money on the stock, whereas selling is more like a kid asking their rich uncle for some money.
Buying is at a new recent high but selling continues to overwhelm buying, rendering the headline above misleading:
http://prudenttrader.com/images/2010/05/Screen-shot-2010-05-23-at-2.26.52-PM.png