Insider Selling

A modest pick up in insider buying this week as 16 insider purchases for $1.7 million worth of stock put recent non-existence insider purchasing to shame. The biggest buying was seen in GE and Caterpillar, which two cumulative purchases for $800k accounted for nearly half of the buying in the week ended February 4. On the other side, it is relentless selling as usual: 126 insider sales amounted to $749 million worth of holding dispositions, with the core of the selling as usual focused on the usual suspects: MSFT ($154 million), QCOM ($73 million), Google ($69 million), GameStop ($60 million) and FCX ($30 million). This is a major pick up in the rate of selling compared to January, and represents a double from the last tracked number of $373 million for the week of January 22.

Since last week the ratio of selling to buying was #Ref!, it could really only go up. And it has. In the week ending January 21, the S&P 500 saw 2 insider buys (Tiffany and Fastenal for a total of $131,227) and 60 insider sales, worth $373 million, for a total insider sell-to-buy ratio of 2,842x. The biggest selling occurred in Discovery Communications ($101 million), Tiffany (where the $54 million just modestly offset the $119,259 in buying), Apollo Group ($44.8 million), McKesson ($40 million), and Hewlett-Packard ($25 million). So just like the government's definition of inflation, where if you strip away everything you have deflation, absent all the selling in the last year, which now amount to about $20 billion, there has been nothing but insider buying.

According to Bloomberg, in the week ended January 14 S&P 500 insiders sold $163 million worth of stock in 54 separate transactions. They bought exactly $0. That's right, in the last week, there was no insider purchasing. This is the first time in years (and possibly for ever) in which we have seen a week during which there was not one purchase by an insider. Surely, there is no need to comment on this result.

After insiders closed off 2010 with just 19x more selling than buying, they have greeted 2011 with a ratio of selling to buying of 114x, a decent pick up in dumping. Specifically there were 4 purchases in the first week of 2011 in S&P 500 names, for a total of $2.5 million in notional. This was offset by $290 million in sales, in 86 transactions. The only notable purchase in the last week was in ATI, which has continued to see insider buying for the past month. The selling side is far more interesting, and here we can see ongoing dumping of Google, MCK, Qualcomm, Ford, HP, Carnival, CSX, and so forth. Luckily for the PDs and the Fed, the retail hot grenade lemmings are finally stepping in, because it was unclear how much longer the HFTs could keep the market from crashing again.

One look at last week's insider transaction list confirms that the deluge of insider selling refuses to end, and is now well in the double digit billion category in recent months. S&P Insiders sold $512 billion in notional in the week ended December 17 per Bloomberg, slightly above the 6 month average, with the top five sales taking place in Google, Ralph Lauren, UnitedHealth, General Dynamics and Starwood Hotels: in these five names alone executives sold nearly $200 million worth of stock. On the buy side, one purchase skewed the distribution to the tune of 96%: an acquisition of TIMET stock (TIE) for $34 million represented nearly all of the $35.7 million in insider purchases in the past week. Incidentally this is the second week in a row in which we have observed material purchasing in TIE, with $2.6 million in Titanium Metals purchased last week (when it accounted for 75% of all insider buying). And with this week's TIE purchase, the insider buying recorded in the past week is the biggest we have seen since beginning to keep track of insider transactions.

After hitting almost 10,000 a few weeks ago, insider selling has tapered off, and in the week ended December 10 insiders only sold a meager 177 more stock than they bought. There were 10 insider purchases of S&P companies for $3.4 million (of which one $2.6 million purchase of TIE stock accounted for 75% of the total), offset by just 136 insider sales totalling $605 million. Insiders who felt particularly compelled to share in their wealth effect included executives at Campbell Soup ($84 million), CVS ($55 million), Google ($54 million), Target ($28 million), and Ameriprise ($24 million). Other insiders who are applauding the Chairman's attempt to stimulate the economy by pushing the Dow to 36,000 (and the price per gallon to $360) included those working for Amazon, Salesforce, Freeport McMoRan, Stabucks, AvalonBay, and another 126 companies. Luckily, there is more than enough HFT buying interest to levitate said stocks into these major offers and offset any selling pressure. In the last 3 months alone insiders have sold just under $10 billion once again confirming just who it is that is benefiting the most from the Chairman's experimentation in monetary lunacy.

In the first full week of the latest iteration of post-QE2 POMO, which was supposed to see a dramatic ramp in stocks, the only thing we have seen is the biggest insider buying to selling imbalance since the data has been tracked. Overall, selling by S&P500 insiders was 8,279.5x times greater than buying (per Bloomberg). There were 5 insider buys for a total of $150,673, and 117 sales for a total of $1,247,500,249. There is no point to even discuss what this data point indicates.

Insiders have officially marked the top of the stock market: last week's insider selling of all stocks (not just S&P) hit an all time record of $4.5 billion. This is the biggest weekly number ever recorded by tracking company InsiderScore.com: as Sentiment Trader highlights no other week before had more than $2 billion in net selling. Furthermore, selling in just S&P companies hit a whopping $2.8 billion: over 4 times more than the week prior! As such the ratio of insider selling to buying is now meaningless. Even Bloomberg, which traditionally just posts the data without providing commentary to it, highlighted this ridiculous outlier: "Insider selling at Standard & Poor’s 500 Index companies reached a
record in the past week as executives took advantage of a two-year high
in the stock-market to sell their shares." We hope those retail investors who dared to reemerge in the stock market and play some hot potatoes with the big boys, enjoy their brief profit as they once again end up being the biggest fools.

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.

Some earth-shattering insider buying in the past week (a fact not seen in months), courtesy of a large block of stock purchased in Monstanto (for $1 MM), Intel ($384K), and GE ($334K), has done miracles to the general insider selling to buying ratio, and almost managed to offset the $114 million sold in Google, $100 million in Oracle, and $30 million or less sold in Safeway, Discovery Communications, Costco and a total of 61 other names. In the week ended October 22, S&P 500 insiders sold 229 times more stock than they bought, per Bloomberg. To be sure, this is a vast improvement from last week's 2,000+ plus ratio, yet still the rolling insider average selling to buying over the past 8 weeks is about 1,000 to 1. At least insiders continue to benefit from ever more irrational prices in stocks from which they can bail at increasingly loftier levels.

Just when everyone thought we may see some moderation in the wholesale dumping of equities by those who actually know what their companies are worth better than moronic stock pumpers on stations that are rapidly losing their viewership, here come the same insiders and pull the rug right from underneath the latest batch of hot potato recipients (that would be various collocated computers mostly, and involuntary taxpayers course). Two weeks ago, insiders sold "only" 1,169 times more than they bought. Alas, last week selling apparently is the new black again, with selling outpacing buying on the S&P by a factor of 2,018. Insiders in Oracle, GameStop, Google, CSX and General Mills appear to be particularly partial to the new black. Something tells us CNBC will not pick up this particular piece of news.

In this week's update of "insiders selling to idiots", we find that the ratio of shares sold to bought by insiders is once again in the four digit range: 1,169 to 1 to be specific. In the past week, insider buying in S&P 500 companies amounted to only $286,000, the bulk of which was in MEMC (WFR). As for the selling: well, it appears ORCL insiders just can't wait to dump as much as they can as fast as possible. Oracle was promptly followed by such overpriced stalwarts as Google, Marriott, Autozone and Salesforce. We wonder if these insiders provide direct or indirect kickbacks to the HFTs who keep bidding the stock up at incremental penny losses, yet are fully compensated for "providing liquidity" by the exchanges in the good ole' liquidity rebate system. The silver lining: this certainly is an improvement on last week's 2,341-1 ratio. Perhaps even the idiots are getting skittish about owning stocks without having access to the Fed's backstop facilities. Also, keep in mind that the primary dealers have about $60 billion in Bills to repurchase past the End of quarter window dressing. Unfortuantely, for the players in the hot potato game, this capital can only come from stock sales.

Sorry kids, we just report the news... as ugly as they may be. After last week saw an insider selling to buying ratio of 1,411 to 1, this week the ratio has nearly doubled, hitting a ridiculous 2,341 to 1. And while Wall Street's liars and CNBC's clowns will have you throw all your money into "leading" techs like Oracle and Google, insiders in these names sold a combined $200 million in stock in the last week alone (following Oracle insider sales of $223 million in the prior week). Insiders can. not. wait. to. get. out. fast. enough. This Fed-induced rally is nothing short of a godsend for each and every corporate executive. But yes, there may be value: there was insider buying in 2 (two) companies last week: General Dynamics and Best Buy, for a whopping total of $177,064. At the same time sales were a total of $414 million: so is anyone wondering why JPMorgan is reopening its gold vault... Anyone left holding the bag on this market when the FRBNY props are taken away, will be left with the same return as all those investors who entrusted their money with Madoff. Guaranteed.

For all those who thought last week's "dramatic" improvement in the ratio of insider selling to buying from 650:1 to "just" 290:1 was a sign things are turning and insiders may soon be selling only 100 or so times more stock per week than buying, we have some bad news. According to Bloomberg, the latest ratio of insider selling to buying was 1,411 to 1. Let us repeat: 1,411 to 1. Needless to say, corporate insiders are totally buying the Fed reflation story, and the economic recovery. Like, totally.

According to Bloomberg,
for the week ended September 17, corporate insiders bought $1.4MM in
shares in a whopping 7 different companies. This was just marginally offset by sales of $441MM in 98 different companies, a ratio of 290 to 1 of stock notional sold to bought. But wait: this is GREAT NEWS: last week the ratio was 650 to 1! So this is a huge improvement and certainly yet another reason for today's rally, even though last week total notional sold was $332 million, or just under 25% lower, and sellers came in well lower at "just" 72. But who needs details when you have the Fed... Certainly not retail, which has now pulled money out of domestic stock funds for 19 straight weeks. So for those wondering just who is orchestrating today's move higher, please let us know if you find out.