Tuesday, November 02, 2010

2nd Nov: Are Insiders Buying Or Selling?

Can't seem to find the link from Bloomberg again.


On ZH: Insider Selling Surges To Multi-Month High, Hits $662 Million, Ratio Of Selling To Buying Doubles To 423x From Week Earlier

  • Bloomberg reports that the week ending October 29 saw the largest amount of insider selling (by notional) in S&P500 stocks in months, possibly in all of 2010 (unfortunately our records don't go back all the way to the beginning of the year). Altogether, $662 million in stock was sold in the past week, compared to purchases of just $1.6 million. The result: an insider selling to buying ratio of 423x. This is nearly double the prior week's 229x. Yet the ratio was rescued by three brave buyers who bought up $787k and $407k worth of American Express and Procter and Gamble. Absent these two purchases the ratio would have been a disaster. What is more important is the denominator side of the fraction, as the total selling over the week hit what appears to have been a near-term record, at a total of $662 million. Biggest selling continues to take place at the (no surprise here) tech names which continue to be bid up by investors hoping a return of the dot com bubble. If there is a clearer indication that no bubble is imminent than relentless insider selling, someone please tell us. And this week the insider certainly are telegraphing just that when it comes to Oracle, Apple, McDonalds, Precision Castparts, EMC and Coca Cola.

On CNBC: Insider Selling Volume at Highest Level Ever Tracked .

  • The overwhelming volume of sell transactions relative to buy transactions by company insiders over the last six months in key leading sectors of the market is the worst Alan Newman, editor of the Crosscurrents newsletter, has ever seen since he began tracking the data.

    The strategist looked at insider trading activity amongst the top ten companies that make up the Nasdaq such as Apple (AAPL), Google (GOOG), and Amazon (AMZN).

    Then he analyzed the biggest members of the Retail HOLDRs ETF like Gap (GPS), Target (TGT), Costco (COST), as well as the top insiders in the semiconductor industry at companies such as Altera (ALTR), Broadcom )BRCM), and Sandisk (SNDK).

    The largest companies in three of the most important leading sectors of the market have seen their executives classified as insiders sell more than 120 million shares of stock over the last six months. Top executives at these very same companies bought just 38,000 shares over that same time period, making for an eye-popping sell to buy ratio of 3,177 to one.

    The grand total for the three sectors are “as awful as we have ever seen since we began doing this exercise years ago,” said Newman, who was ahead on such trends as the dangers of high-frequency trading and ETFs before the ‘Flash Crash’. “Clearly, insiders are seeing great value only in cash. Their actions speak volumes for the veracity for the current rally.”

    “At the risk of sounding like a broken record, we expect a significant correction,” said the newsletter editor.

ps: 8 consecutive weeks of rather strong insider selling by S&P companies.

Past postings:

  1. Are Insiders Buying Or Selling?
  2. Sep 21: Are Insiders Buying Or Selling?
  3. Sep 28: Are Insiders Buying Or Selling?
  4. Oct 6: Are Insiders Buying Or Selling?
  5. Oct 11: Insider Selling Dominates Again
  6. Oct 18: Are Insiders Buying Or Selling?
  7. Oct 26: Are Insiders Buying Or Selling?