CORPORATE INSIDERS VOTE WITH THEIR FEET AND THE RESULT IS ALMOST UNANIMOUS
THIS IS A SUCKER's RALLY
Despite a near 50% rally in the stock market and “better than expected” earnings across the board, we’re continuing to see unprecedented levels of insider selling and record low levels of insider buying. The buyers in recent weeks have accumulated just over $26MM in stock ($16.5MM of which was one buyer). Meanwhile, the sells amount to over $300MM. That’s a staggering 1:30 ratio if you back out the one larger buy.....insiders haven’t been substantial buyers since late last year and in early March of 2009 – both periods just prior to major market rallies.
Although the level of insider selling is certainly alarming it’s important to note that the very low levels of buying are particularly alarming. Insiders sell stock for many reasons, but they generally only buy stock for one reason: they believe the stock is going up. Despite the fact the media is reporting an end to the recession, a bottom in housing and a trough in earnings we are seeing a vote of zero confidence from the people who know these companies better than anyone else. Could this be a sign that the underlying economy is still in fact very weak as we continue to see in the trucking data, weekly rails data and weekly same store sales?
http://pragcap.com/insider-selling-soars-buying-still-at-record-lowsand update:
THE NEGATIVE TREND IN INSIDER SELLING WORSENS
For the latest two week period ending yesterday, insiders purchased just $4.6MM in stock while selling an astounding $471MM in stock. That is a $217MM jump over last week’s reading of $254MM. The trend in insider selling has been negative for quite some time, but even more alarming is the total lack of insider buying. Insiders sell for a number of varying reasons, but it remains confounding that the equity markets can be so convinced of an economic rebound while insiders give a resounding vote of no confidence in their own companies via purchases of their own shares. Perhaps the lack of organic growth via revenue growth has insiders less than convinced of the economic rebound.
http://pragcap.com/the-negative-trend-in-insider-selling-worsenshttp://www.rgemonitor.com/blog/roubini/257685/roubini_video_interview_on_forbescom