Fewer Corporate Insiders Are Buying Their Own Stocks Than At Any Point In 29 Years

Tyler Durden's picture

If 'everything is awesome' then someone will have to explain to us why corporate executives are buying their own firms’ shares at the slowest pace in at least 29 years.  According to the Washington Service, there were a total of 279 insider buyers in January, the lowest since 1988.  Moreover, the number of sellers has also grown in recent months, pushing the ratio of buyers to sellers in February to its lowest since 1988 as well.

Meanwhile, Ned Davis Research points out that insider selling has been elevated enough to trigger his firm's in-house bearish signal for 11 weeks in a row, the longest stretch since 2014.

Insider selling is generating a “sell” signal to analysts at Ned Davis Research Inc., a research firm that uses technical analysis. Insider selling at firms whose shares trade on the New York Stock Exchange, Nasdaq Stock Market and American Stock Exchange triggered its in-house bearish signal for 11 straight weeks, the longest stretch since 2014.

 

“The fact that we’ve gotten more selling is a sign of concern that maybe the market has gone a little too far too fast,” said Ed Clissold, chief U.S. strategist at Ned Davis. “We wouldn’t be surprised if there was a modest pullback given how far the market has run.”

Insider Buys

 

Of course, as the WSJ notes, insiders sell stock for a variety of reasons, and often simply for diversification or to fund personal expenditures.  That said, when insider selling reaches the extremes we're seeing today, it's hard to imagine that valuations aren't playing some role in the decision making process.

Insider selling can give mixed signals, too, and the absolute figures alone don’t themselves portend an imminent decline in stocks. Corporate executives can sell their stockholdings for many reasons, and selling generally outpaces buying regardless of market conditions.

 

“People sell for a variety for reasons, exercising options or buying a house,” said John Buckingham, chief investment officer at Al Frank Asset Management. “But generally there’s one reason to buy—you think your company is undervalued.”

 

During early months of any year, executives who received stock-based compensation are freed up to take money off the table, so selling tends to be higher, according to Ben Silverman, director of research at InsiderScore, a research firm.

Meanwhile, some of the largest sellers of the "Trump Rally" have been the executives running the biggest beneficiaries of that same rally, namely the wall street banks.  Morgan Stanley CEO James Gorman sold shares for the first time in six years just days after the presidential election, exercising options on 200,000 shares, and then sold an additional 100,000 shares later that month.

MS

 

JP Morgan insiders have also been large sellers of the Trump rally...

JPM

 

...as have the folks at Goldman where insiders dumped 100's of thousands of shares right after Trump's election and have continued to sell heavily ever since.

GS

 

Meanwhile, BAML is the only wall street bank that seems to have faith in the Trump rally. 

BAML

 

Could it be that maybe everything is not all that awesome after all?

ENA

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J bones's picture

Belief that there will always be a greater fool willing to accept more losses

junction's picture

Smart corporate insiders!

prime american's picture
prime american (not verified) junction Mar 10, 2017 5:58 AM

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Jack.Lincoln's picture

“We wouldn’t be surprised if there was a modest pullback given how far the market has run.”

He said "modest" folks, no need to panic.

I wouldn't be surprised if the market lost 50% of it's value in .03 seconds.

No_More's picture

They're just gettin' out while the gettin's good. If they thought the gettin' out would get better later, they'd at least hang on to their stocks & options.

You don't want to be trampled in the rush to get out when it turns to poop, so of course being an insider why not get out on the upswing?

zeroedgesd's picture

These crooks will milk it as long as they can. Make as much moneyh as they can. Then leave.  LEt everything go bankrupt. Get a bail out and they will be laughing all the way to the bank. END OF STORY.

abyssinian's picture

Time for Jamie "Cancer throat" Dimon to buy more JPM stocks to pump up the bank stocks!!!!!!

Xanadu99's picture

Agree. Wouldn't surprise me in the least.

4Xleverage's picture

HA. Love it. Jamie Dimon is the poster child for corruption. These guys are getting ready to run their biggest scam on the investors of America and all over the world.

 

Now Zerohedge has done a great job of getting us ready for that. But like many other analysts they just turned bearish way too early--like 6 years too early.

 

The guys who left Goldman Sachs in the late 90's had it right.  They are the only analsyts who continually call the market moves both up and and they are the only ones who have the guts to show their past calls.  Here is where they show some of their past calls. https://www.facebook.com/166578775325/photos/a.10153488951800326.1073741827.166578775325/10154415124400326/?type=3&theater 

Xanadu99's picture

EXCELLENT.  It is rare to find analysts who actually show their market calls.  Nice to see their stock and gold calls. 

Ballin D's picture

you forgot to switch to your other sockpuppet account before you replied to yourself this time.

Babs.St.Louis's picture

It does seem  like it doesn't it.  The thing is that Shepwave has been around a long time, like since the early 90's I think.  So it actually makes sense that these guys are coming here.  I began seeing them about a year or two ago I think.  They keep increasing that is for sure.  But look at their charts. Their calls are petty much flawless so if their readers are scamming, oh well I guess. 

I will say this. At least they are not as obnoxious as Cramer. And Shep actually makes legitimate and correct calls in the markets, unlike Cramer who is just a glorified cheerleader.

 

MikeM54's picture

Nice market calls.  Their calls in gold alone have blown me away. Simply amazing.

JailBanksters's picture

If I was a CEO, I'd take the money and run. Could't care less what happens next, gat a Hundred Million that's more than enough for me to retire on with my Kids.

 

Son of Captain Nemo's picture

But of course... Nothing like being at the "front of the line" with free cash from Janet Yellen to buy lots of that Au and Ag at BOE SET PRICES for the "rainy day" you created for your "INVESTORS"!...

Just make certain you have a change of address and plastic surgery at the "ready" when those INVESTORS come looking for you and your PM!!!

latestflavor's picture

OK perspective here.  Banks have been paid in stock since the financial crisis and they have been waiting for rates to rise and the yield curve to steepen.  They need the goddamn cash which was usually in their pockets in decades past.  Please back out the banks and re-issue the numbers and analysis, otherwise this is monkey dung analysis.  You cant do apples to apples when the massive financial sector moved to oranges.  duh?

moneybots's picture

"Fewer Corporate Insiders Are Buying Their Own Stocks Than At Any Point In 29 Years"

 

So more insiders were buying more of their own stock when the market was peaking in 2000 and 2008, than they are now? In 2005, the home builder CEO's were massively dumping their stocks.

sorocaba's picture

Where do i get this charts?

East Indian's picture

Had you Americans elected Trump in 2008, almost 90% of these CEOs would have been in jail by now; in these past 8 years, crooks and banksters (am I repeating myself?) have become so entrenched, now they have the temerity to fight the legitimate government. Probably because they have bought almost half the world with the QE funny money created out of thin air in the past 8 years. 

TeethVillage88s's picture

I ain't a Financial Analyst or Advisor, not an expert, not a Economist.

But...

Maybe the Leverage is just at the Damn Top you idiots!

Maybe without sales, expansion, growth, innovation, ingenuity, genius, patents, new copy rights, property rights... it is just a Monty Python Skit.

NO, Leave me alone! It is just a Monty Python Skit! You fucking Assholes! Fucking business warfare based on finance not services nor production! There is no GDP Growth since like 1979. Government spending is not GDP Growth! Rentier Behavior is not GDP Growth. Real Estate price bubble is not GDP growth. Money Hoarding from LIRP/ZIRP/NIRP is not growth. TARP spending is not Growth. QE & QE Hoarding is not Growth (M & A, Stock Buy Backs, Bonuses for executives)

konadog's picture

The US market is at 1929 valuation. The risk of losing half of your money or more for a best-case scenario where the returns will be two or three percent just doesn't make any sense.  I suspect that's the insider selling motivation. It certainly has been my motivation. I'm generally a buy and hold forever person, but I've sold quite a bit in recent months.  It would be fascinating to know who has been buying and bidding prices to the moon and why. The familiar stench of government intervention is present - although maybe not by the US in this case.

peterk's picture

its not if insiders are selling  or not, its wether they are short,, a naked  short,.

 

So far that ratio doesnt seem to different  form yers past on that chart... no  big deal

whatisthat's picture

I would observe insider selling of company stock shares and options means the insiders are buying something different. So what are they buying?

gdpetti's picture

Exactly, or have they decided to trust their own policies at the Treasury/Fed and go long the dollar? Maybe buy govt bonds just before they too crash? Finding safe harbor usually means the PMs, which are still under attack, but seem to be prepping for the final solution... thus the Fed's desire to help push the market over the cliff with interest rates increases... just in time as usual... showing who's boss, right?