Take Money Off the Table: Insider Selling Increases Post-Q2 Earnings Reports

According to InsiderScore.com, U.S. corporate insider selling reached its highest levels for the week ending August 11 since June 5, 2007.

Insiderscore.com tracks publicly traded buying and selling activity in the United States, and it’s the best service I’ve seen focusing on this discipline.

The recent data continues to paint a bearish picture on insider trends. Insiders, who must file with the SEC after making a transaction, have been aggressively selling company shares since last spring.

Insiderscore.com reports that companies marked by selling, outnumbered those with buying by more than a 2-to-1 ratio – the first time that’s occurred since the week ended February 27, 2007.

Insiders at publicly traded companies know their company prospects better than anyone else – better than Wall Street analysts, money-managers and traders. They see the numbers and orders every day and have a great gauge of where company revenues are headed.

Ahead of earnings or big changes in business plans affecting gross revenues insiders will typically file with the securities authorities following cash-based purchases of company stock. If an insider is buying it’s because he or she believes share price are heading only in one direction – higher.

But the trend in net selling since last spring is a bad omen for a market lacking the conviction from its most ardent supporters – executives and directors of publicly traded companies who usually vote with their wallets.

Are the insiders right?

I can’t argue with the trend in big money – they’re bearish and taking money off the table.

I would too.

Comments

[WhoisJohnGalt:]

Thanks for sourcing the site, insider trading is a nice factor to consider when investing. Of course, make sure to look at the SEC filings when executives sell their shares, for it could be a pre-declared transaction.

Makes perfect sense that they're taking money off the table. The economic data looks rosey, but people within the companies whose earnings reinforce these statistics have a forward view of whether or not the good times will roll. Investors have fallen in line with the V-shaped recovery propaganda just as corporates are walking out.

Aug 18 04:46 PM

[whidbey:]

This is not news by any means. Further, we know that there are possible reasons aside from a crash. The Administration is changing the tax laws in ways that investors find disgusting and expensive, if you own stocks. The capital gains rate goes up shortly, the ordinary income taxes on those over 250K are targeted for a rise, and the SEC rules on options and bonus stock payments are indeterminate at this writing, but thought likely to be moving against the holders. All of that is current in Board rooms, as well as the observation that the President is content that the top 1% of federal taxpayers carry 40% of total tax bill. That is a target that worries everyone. You could be correct, but there alternatives to your hypothesis.

Aug 18 04:53 PM