Insider selling for the latest weak spiked to $846MM while buying remained abnormally low at $14.7MM.   Selling spiked almost three fold, but was highly impacted by $330MM in selling in CBS by Sumner Redstone.  Buying, however, fell from $32MM.   Of course, it is the low level of buying that is particularly alarming.  Insiders continue to exhibit an unusually low level of confidence in their own companies.  As valuations spike, and the jobless/revenue-less recovery continues it’s not surprising to see insiders display a high level of skepticism with regards to the rally.  This skepticism is most visible through the use of their own personal investment dollars – very few of which are going into their own companies.


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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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  1. Let’s put aside the very low purchases for a minute, if we assume the uncertainty of the economic landscape explains a ‘hold’ strategy.

    One would expect sales to also be on hold in this context.

    But what if what we are seeing is the liquidation of stock holdings purchased on margin, or with the help of corporate loans. I think the practice may have been much more important than is publicised. Those sales would therefore be less a reflection of business prospects and more a liquidation process of hot money. We could imagine those directors selling their debt financed holdings as soon as the price of the shares reach the holdings breakeven point.

    Worth a thought?


  2. @W

    > what if what we are seeing is the liquidation of stock holdings purchased on margin, or with the help of corporate loans

    I think that is not likely the case. Corporate loans for officers have gone the way of the dodo, and there is really no need to buy company stock on leverage. These are *insiders* or typically section 16 officers who are paid in gobs of equity. They would not need or typically desire to lever up for more on an already overweighted portfolio.

  3. Perhaps they are selling their stock to pick up ever cheaper real estate. Thats what I am doing with my AAPL options and shares gained at Apple, especially as they were just at an all time high and Real Estate is getting more reasonable.