INSIDERS STILL NOT BUYING THE RECOVERY TALK
26 April 2010 by Cullen Roche
10 Comments
Negative trends in insider transactions were little changed on the week as insiders remain heavy sellers of their own shares while purchasing next to none. Total buying remained very low historically at just $4.65MM for the week ending April 23rd. Selling also declined from last week, but remains substantially higher than buying at $626MM.
The 4 week moving average fell slightly to $6.36MM – a near low since the economy troughed in 2008. Insiders have remained skeptics of their own corporations despite recent signs of recovery.
Notable buying:
Notable selling:
Source: FinViz
TPC, do you know if historically (over the last 30 years), there is any kind of correlation between insiders transactions and market performance? If I look at this chart it’s not obvious in the last year. Is this really a relevant indicator?
fayce, i am just guessing based upon my experience following insider buying (and barrons articles lambasting insiders for bad timing) that there is a negative correlation.
also, i believe you could graph common stock repurchase programs against stock performance and find a contrarian indicator
i just don’t believe insider buying is a reliable indicator. i do however believe that capex spending can be a reliable indicator of future corporate performance which may translate to stock performance
see http://scottgrannis.blogspot.com/2010/04/strong-growth-in-capex-is-very-bullish.html
Thanks for the input Chris. Interesting charts indeed…
Capex is certainly a positive, but very volatile. Also tends to lag just like labor growth.
but capex can be a leading indicator of job growth
It’s a good long-term indicator. You can see where buyers stepped in when fear levels were very high in Nov 08 & Mar 09. But insiders only buy their own shares with a very long-term perspective because they generally have lock-up periods. Buying did remain low into the 03 recovery however…..
tpc
OT
see http://online.wsj.com/article/SB10001424052748703441404575206252252365076.html?mod=WSJ_hps_LEADNewsCollection to your point about buffett’s hypocrisy.
Nice to see him pushing his weight around to defend himself and his shareholders, but the hypocrisy of the man is damn near sickening….
Insiders have had a hard time using the market as a cash machine in the past decade as the market as gone nowhere. Consequently, yatch, prestige cars, jewelery has been put on the back burner more often then not. Guess what, the market is now up a little (Nasdaq is still 50% of what it was 10 years ago) and everyone asume that they should be buying there own shares yet ???
Rule number 1: Happy wife happy life.
Eh, not the last decade but perhaps the last 2 years. It was VERY commonplace in the past for insiders to put up stock holdings as collateral for Credit lines in Private Banking arms of banks. I mean, who wants to cash out and pay ANY taxes when you can borrow at low rates and let your stock holdings continue to appreciate?
Of course, the problem is when your stock plunges and your $40 million loan gets called in – and your stock is only worth $5 million. That’s when the Hank Greenbergs of the world start selling at whatever price they can get.