Insider Selling Hits Highest Levels Since Crisis Began

The declines in equity values in the past year, along with the massive interventions by global central banks to stabilize credit markets, has helped after 17 months to make equities look attractive again as the major averages continue to sustain gains and uptrend.

However, executives and insiders at U.S. companies are taking advantage of this situation by unloading shares at the fastest pace since the start of the financial crisis in late 2007.

According to Bloomberg:

Insiders from New York Stock Exchange-listed companies sold $8.32 worth of stock for every dollar bought in the first three weeks of April, according to Washington Service, which analyzes stock transactions of corporate insiders for more than 500 institutional clients.

That’s the fastest rate of selling since October 2007, when U.S. stocks peaked and the…bear market that wiped out more than half the market value of U.S. companies began. The $42.5 million in insider purchases through April 20 would represent the smallest amount for a full month since July 1992, data going back more than 20 years show. That drop preceded a 2.4 percent slide in the S&P 500 in August 1992.

Insider behavior certainly matters because they know more than outsiders and their actions sometimes can provide the most accurate reflection of the prospects for the company or the markets in general going forward. However, there is always the possibility that corporate execs and insiders may have become too cautious.

“Things are a lot better than they were,” said Green, director of research at Penn Capital, which oversees $3 billion in Cherry Hill, New Jersey. Recent history also shows that “insiders have been wrong,” he said.

Let’s hope that’s the case.

Comments

[optionsgirl:]

Selling into a rally makes good sense.Which of these companies are in bad financial shape? Which ones look like they might not survive? Are there any particular sectors with heavier inside selling?

Apr 27 08:35 AM

[ECONOMICS 101:]

Johnathan Vrozos says this is slightly confusing report because you need a witness to witness and make sure this information is correct. We are sure that people would want to sell their shares but into what market. This market is so volatile and corrupt that no one knows what is up and what is down anymore. Whoever is successful in predicting this market should go to Boca Raton Florida and golf at St Andrew's Golf Club.
I wish i was an in insider with shares to sell.
Good luck to all.
by Johnathan Vrozos
johnathanvrozos.ca

Apr 27 08:44 AM

[pockyclips ...:]

Lots of earnings reports due out by end of week. Increased volume of stocks with reports due would be a good indication of market direction for this quarter.

Apr 27 09:00 AM

[jeandit75:]

Sorry but it speaks by itself and its no time to be long equities.

Apr 27 09:13 AM

[kelm:]

Insiders are as uncertain as everyone else and many ave ost of their money in their companies stocks. They al have retirement and colege to fund as well. The real question might be how much of the proceeds form the insider selling goes to cash and how much gets re-invested in the market but in a more diversified way.

Apr 27 09:14 AM

[TeresaE:]

In the big financial banks, they are announcing bogus "profits" and "improved positions", while bankrupting their PAYING customers.

Ken Lewis, head of BoA, started bad mouthing the Merrill deal and covering his own butt, a mere days after coming out stating just how flippin rosy every thing is.

Funny, Wagoner came out with a "we don't need more help now" a mere week before Obama removed him and GM announced it needed a huge influx of cash.

Just because Washington & Wall Street feeds us BS and keeps us in the dark does not make us REAL mushrooms.

They are lying and cashing out while the cashing is good. Which tells you they don't believe this is a sustainable rally, nor economy.

As my Grandpa taught me, follow the dollar. The dollar is fleeing now folks.

Apr 27 09:15 AM

[ksmithdc:]

Interesting read, thanks.

Apr 27 09:33 AM

[notsosmart:]

its all ponzi. it will always be ponzi.its just taken a long time for dumb-dumbs & their tea bags (useless) to wake up.

Apr 27 09:38 AM

[Allan Frain:]

And the other side of the coin is the lack of share buybacks.

Apr 27 12:38 PM

[AndrewBaker:]

You don't sell what you think is going up in price, so it's pretty obvious that there is more bad news out there we haven't heard yet. These guys are lucky there is a rally to sell into, and the rest of us should learn from that: don't buy into a rally. Yet, for there to be a rally in the first place, someone's buying. Now when individuals, particularly those in the know, sell; and 401K providers, mutual funds and others using someone else's money are buying; I know who'd I'd follow...

Apr 27 01:00 PM

[Mutual Fund...:]

Good little article. Maybe some profit taking and or repositioning going on here. Believe markets will continue to rebound along a bumpy road.

www.mutualfundwealth.com/

Apr 27 05:40 PM