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Back To Normal: Insider Selling Outpaces Buying By 58 To 1
After last week's outlier data, in which 3 buyers pushed the balance for the first time in over a year to a positive buyer/seller ratio, this week we are back to the new normal: a/k/a selling deluge. $488 million in shares was sold in the past week in 192 documents transactions, while just $8 million was bought in 38 deals. Notable dispositions included Bill Gates selling $85 million worth of MSFT, Roger Pensky dumping over $100 million, and Juniper Chairman Scott Kriens selling $12.5 million worth of JNPR stock. Also, after announcing a major trimming in his GOOG portfolio, Sergey Brin sold some "pocketchange" worth of Google stock worth $7.6 million. Source: FinViz
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Is Mr. Doll at Blackrock still buying stocks in anticipation of the S&P 500 reaching 1250 ?
Having studied insider selling for years, I can unequivocally state that it is a terrible indicator. Insiders sell for various reasons, many on a programmed basis to diversify their holdings. Insider buying is a better indicator but even that is not perfect.
Maybe on an individual basis, you are correct. But the point here is to look at the big picture.
On that basis, we should all be buying Chinese Solar stocks by the boatload.
Or is it sunload?
same thought. i don't doubt the general conclusion that insiders are bailing in the face of steep valuations, but to be accurate the pre-arranged sales should be filtered out.
Wouldn't surprise me if Gates set up a multi-year plan, I remember Brin & Page doing it recently:
http://www.sec.gov/Archives/edgar/data/1288776/000119312510011019/d8k.htm
I think a general conclusion that analyzing insider activity is useless is a bit off the mark.
It would be more accurate to say, however, that analyzing insider trades is a very complex exercise. And Leo is correct in surmizing that insider selling is more complex than insider buying. I'm not quite sure that by saying "insider selling outpaces buying by 58 to 1" means anything without historical context or intensity. That doesn't mean that aggregate activity is useless-- far from it.
In my opinion, if one wants to dismiss the data altogether because of pre-arranged sales, option exercises, etc.-- I'm not going to stop anyone from doing so.
Be that as it may, I still appreciate the data, a salve on my crusted trader's wounds.
It hasn't been a good indicator for the recent past.
Anyone have a link to a historical chart of the ratio of insider buying to selling over the past 10 years?
Can't publish the actual chart here, but NDR research has one. Insider selling hugely outpaces insider buying over the long run, for completely obvious reason. Where we are right now is basically the median, this isn't unusual.
Insider buying/selling does have predictive power. Since 1995, After the insider buy/sell ratio reaches a certain extreme high level, the market is up 9.89% on average 26 weeks later. After the insider buy/sell ratio reaches a certain extreme low level, stocks return on average -1.02% over the next 26 weeks. The rest of the time they return on average 3.43% over the next 26 weeks.
Right now we are smack dab in-between the two extremes, and right at the 1995-2010 median.
I'm pretty sure you are right. I'll hold dollars for a while, ride the wave, look for a time to jump off and buy more PMs. But I do think we have some down distance to go. These bets need to unwind, after the unwinding faith in governments/fiats will be even worse, and the new safety must be something else. PMs will probably be one of those something elses. After some bottom dwelling in deflation, inflation will kick in.
I'd sell the physical gold I have now, and take the profits where I can (a little of it is underwater right now) but things can change so fast, and if I don't have it, I will be, shall we say, uninsured.
Andy, no surprise to me, I called last October.
http://twitter.com/OpenJonathan/status/8620937722
This is a crisis. It will not move forward till a way forward is made. This summer when the populations start calling the shots for real, hopefully, a way forward will be found. This is that point in a relationship where you either change something, leave or just soldier on. Except corporate world and huge government world isn't sleeping on the consumers couch getting sex and food whenever it wants. It's out in a swank abode bragging about all the billions in cash it has on hand making false promises to improve the lot of the world by killing poor people with heavy metals in syringes.
http://www.ronpaulforums.com/showthread.php?p=2528659
Ya the dollars going up. Stuff is getting liquidated and theres huge demand to settle up. If it goes to 82 or 86 fagettaboutit. It better turn back around before the week ends or there won't be NEAR enough people psychologically ready for what's coming.
What's the P/E Ratio of the S&P given Insiders seem to be selling Treasury stock as soon as possible. Instead of having the S&P at 13x forward earnings as I have seen recently, the effect of hidden wealth transfers to management (stock options) should cause the forward earnings to lower than estimated.
Has anyone seen S&P earnings reflecting stock option grants recently?
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