Insiders Are Buying

From The Star-Tribune:

Stock purchases by company officers and directors ... is growing evidence that insiders believe their companies have the worst of the recession behind them and their stocks should rise this year, analysts said last week.

"This is incredibly positive," said Brian Flanagan, a stock portfolio manager at Thrivent Financial who tracks insider trading. "The sell-to-buy ratio is incredibly low. Most of the buying has been in smaller-cap stocks and the financial companies."

On my Bloomberg Monday, there were 51 pages of companies with insider buying and 29 pages of insider selling. I do not know how this typically compares since I just found the page today. However, insider selling usually outpaces insider buying significantly.

For the financials, there were 23 pages of insider buying and 7 pages of insider selling.

"Insiders across the market are growing bullish," said Ben Silverman, director of research at Insiderscore.com. "The ratio of buying to selling in recent days has been 3-to-1 for insiders, and that's a high ratio. Over the last 52 weeks, the ratio has been about 1.8 to 1. There really are two reasons to buy: You believe the stock is going up, or your employment contract requires you to buy the stock." ...

Thomson Reuters' insider report shows buying by insiders at Standard & Poor's 500 companies tripled in February to more than $29.6 million compared with January.

Insider buying is not a particularly good indicator of near-term market direction but it is usually a pretty good signal of valuation and long-term prospects.

Comments

[Speedspirit]

American Spirit is alive and well. The financial crisis is a war being waged by the POWER ELITE to gain more wealth and control but those at the helm of thier own companys see potential to secure a profit from all this pessimism. All this DOOM and GLOOM is only one posibility the other is we get to work, fix the problem and move on the American Stlye. The crisis has in fact been made worse by the media and this fear factor. Time to believe in something greater than public officials.

2009 Mar 10 08:20 AM

[phdinsuntanning]

I trust they are not using FED money

2009 Mar 10 08:22 AM

[pockyclips 2020]

Wait a minute. Aren't you the same folks that were walking around last September claiming that the recession was WSJ hype? It took us at least 10 years to put this economy in the ditch, and it's gonna take more than 6 weeks to get it out.

2009 Mar 10 08:25 AM

[kelm]

Keep in mind with the financial stocks that there has been significant pressure on executives and directors to have a lot of skin in the game. So they are under pressure to buy. There are many companies as well who hope to get a tick up from the stimulus. We are not in normal times. These same executives and company officers who we so want to believe know when to buy their own stock low totally failed to see this crisis coming.

We look set for a rally this week. Enjoy. It may last a few weeks but then will fade - we remain in a bear market for some time to come.

2009 Mar 10 09:20 AM

[DownOnMyLuck]

On Mar 10 08:20 AM Speedspirit wrote:

>Time to believe in something greater than public officials.

I gave a thumbs down but meant a thumbs up.

2009 Mar 10 10:17 AM

[Fabien Hug]

Toro, you've been bullish for quite some time. Today seems to be your day. I hope it will last.

2009 Mar 10 01:44 PM

[Amitabha Mukhopadhyay]

I think this increased buy to sell ratio is an indication that the worst is over and gradually the stocks will rise. It is also very obvious since so much fed money is being pumped in the economy. Another factor to watch since I am following the articles in Seeking Alpha for a few months the attack on the government for the financial crisis have somehow mellowed. All these indicates the financial situation is turning for the better. Next thing to watch is the unemployment figures. There will certainly be a time lag between improvement in the economy and fresh job creation but I think on that front also we will see better figures in the weeks to come.

2009 Mar 10 01:49 PM

[ding]

I hope for a recovery, but I plan for hyper inflation.

The hyper inflation will be due to a reduction in supply which will be due to a reduction in output which will be due to a reduction in sales which will be due to a reduction in buyers which will be due to an increase in unemployment. During all of this credit will become increasingly harder to get, even for those who are economically justified in getting it.

Respectfully,
ding

2009 Mar 10 02:27 PM

[a. palmer jr.]

The market really looked good today...I hope it wasn't just a "fools rally"

2009 Mar 10 08:51 PM