BlueTrader's Instablog

Insider buying reaches two-year high

Sun, 14 Aug 2011 04:18:21 -0400

In the week ended August 12, we recorded 1133 open-market insider trades at 594 companies having a total value of $971.6 million. Transaction dollar volume was 29% lower than the previous week and 0.6% lower when compared to insider trading activity a year ago. Purchases accounted for 67.3% of all open-market trades last week. Our insider sell-to-buy ratio, which excludes derivative conversions and certain other types of transactions, ended the week at 0.44, down from a previous reading of 2.17. In addition, the number of open-market insider buy transactions was the highest since March 2009.

As we noted last week, we view continued aggressive insider purchases as a signal that stocks are now reasonably valued. Still, like in 2008 going into 2009, insiders may be early in terms of calling a bottom, as valuations could overshoot to the downside given the high degree of macroeconomic uncertainty. Net-net, while equities are now fairly priced relative to historical averages, we believe that we have not seen a firm bottom in stock prices (absent a new round of money printing at the Fed).

Insider trading activity was the most concentrated in the Financials sector, where 492 insiders filed trades having an aggregate market value of $228.2 million. Rounding out the top three sectors were Technology (196 trades for $264.5 million) and Industrials (195 trades for $82.6 million). There was a large spike in activity in the Utilities sector, where the number of trades filed was up 164% on the previous week.

The largest open-market transaction of the week was in FO stock, where William A. Ackman, a large shareholder in the firm, purchased 3,648,510 shares for a total of $193.9 million. The biggest sale last week was for 689,016 shares of FSLR, worth $68.7 million.

Largest insider buys of the week

Largest insider sales of the week

Insider Trading Activity Suggests Equity Correction Not Over

Sat, 06 Aug 2011 15:38:35 -0400

In the week ended August 5, we recorded 769 open-market insider trades at 415 companies having a total value of $1.4 billion. Transaction dollar volume was 54.8% higher than the previous week and 121% higher when compared to insider trading activity a year ago. Purchases accounted for 30.4% of all open-market trades last week. Our insider sell-to-buy ratio, which excludes derivative conversions and certain other types of transactions, ended the week at 2.17, down from a previous reading of 7.04. On average, a sell-to-buy ratio below 4 is considered bullish, while readings above 7 are bearish. However, the 4-week moving average, which tends to be more indicative underlying market trends, remains far from flashing a bullish signal.

Since the end of April, we have warned of a correction in U.S. equities, and last week's sharp sell-off (particularly Thursday's 512-point bloodbath on the Dow) on heavy trading volume confirmed our fears. To make matters worse, Friday evening, S&P stripped the U.S. government of its AAA rating, citing weakening "effectiveness, stability, and predictability of American policymaking". Throw in weak earnings guidance for the rest of the year from major firms, slowing global growth, and heightened risks in the Spanish and Italian government debt markets, and it is hard to argue that things are looking good, as many analysts predict. The bottom line is that we view the correction as being far from over (absent a new round of money printing at the Fed). If insiders start buying en masse, we will view their purchases as signals that stocks are reasonably valued. Still, like in 2008 going into 2009, insiders may be early in terms of calling a bottom, as valuations could overshoot to the downside.

For the 17th consecutive week, activity was the most concentrated in the Technology sector, where 200 insiders filed trades having an aggregate market value of $514.7 million. Rounding out the top three sectors were Financials (216 trades for $55.3 million) and Consumer Discretionary (117 trades for $134.7 million). There was a large spike in activity in the Utilities sector, where the number of trades filed was up 450% on the previous week.

The largest open-market transaction of the week was in BAS stock, where Credit Suisse Ag, a large shareholder in the firm, sold 5,750,000 shares for a total of $186.9 million. The biggest buy last week was for 4,153,200 shares of XCO, worth $61.3 million.

Largest insider buys of the week

Largest insider sales of the week

Insider Trading Wrap-up: Week ended July 22, 2011

Sat, 23 Jul 2011 16:15:56 -0400

In the week ended July 22, we recorded 500 open-market insider trades at 283 companies having a total value of $4.2 billion. Transaction dollar volume was 716.1% higher than the previous week and 732.3% higher when compared to insider trading activity a year ago. Purchases accounted for 12.4% of all open-market trades last week. Our insider sell-to-buy ratio, which excludes derivative conversions and certain other types of transactions, ended the week at 9.79, up from a previous reading of 4.17. We interpret this as a bearish signal for equity market performance in the near term, as on average, a sell-to-buy ratio below 4 is considered bullish, while readings above 7 are bearish. The 4-week moving average has also risen into bearish territory.

While the Q2 earnings season thus far has been decent, big misses by Caterpillar and very cautious guidance from other firms underscore the notion that the global economy is going through (at least) a soft patch. In light of these developments, as well as continued uncertainty regarding the sovereign debt markets on both sides of the Atlantic, we continue to remain cautious on stocks in the near term.

For the 15th consecutive week, activity was the most concentrated in the Technology sector, where 103 insiders filed trades having an aggregate market value of $87.3 million. Rounding out the top three sectors were Consumer Discretionary (63 trades for $3.2 billion) and Industrials (66 trades for $50.2 million).

The largest open-market transaction of the week was in WMG stock, where 7 insiders sold 367,832,000 shares for a total of $3 billion. The biggest buy last week was for 272,293 shares of TXI, worth $10.8 million.

Largest insider buys this week

Largest insider sales this week

Insider Trading Wrap-up: Week Ended July 15, 2011

Sat, 16 Jul 2011 20:18:09 -0400

In the week ended July 15, we recorded 558 open-market insider trades at 285 companies having a total value of $510.2 million. Transaction dollar volume was 41.4% lower than the previous week and 78.3% higher when compared to insider trading activity a year ago. Purchases accounted for 20.1% of all open-market trades last week. Our insider sell-to-buy ratio, which excludes derivative conversions and certain other types of transactions, ended the week at 4.17, down from a previous reading of 9.09. On average, a sell-to-buy ratio below 4 is considered bullish, while readings above 7 are bearish. As we have been writing for the past several weeks, stocks may continue their summer rally; however, there remains significant downside risk due to continued uncertainty in the European sovereign and bank debt markets, weak seasonal trends, and low overall market liquidity.

For the 14th consecutive week, activity was the most concentrated in the Technology sector, where 125 insiders filed trades having an aggregate market value of $106.1 million. Rounding out the top three sectors were Consumer Discretionary (127 trades for $197.2 million) and Industrials (65 trades for $44.5 million).

The largest open-market transaction of the week was in BTH stock, where 2 insiders purchased 800,000 shares for a total of $41.8 million. The biggest sale last week was for 953,200 shares of SIX, worth $35.7 million.

Largest Insider buys of the week

Largest Insider sales of the week

Insider trading wrap-up: Week ended July 8, 2011

Sat, 09 Jul 2011 20:21:44 -0400

In the week ended July 8, we recorded 767 open-market insider trades at 392 companies having a total value of $870.7 million. Transaction dollar volume was 51.7% lower than the previous week and 271.2% higher when compared to insider trading activity a year ago. Purchases accounted for 9.1% of all open-market trades last week. Our insider sell-to-buy ratio, which excludes derivative conversions and certain other types of transactions, ended the week at 9.09, up from a previous reading of 6.76. On average, a sell-to-buy ratio below 4 is considered bullish, while readings above 7 are bearish.

As we head into the Q2 earnings season, our expectations are for decent numbers overall. Guidance updates will be mixed as companies balance coping with moderating (but sill growing) final global demand with relief on the input cost side, given the recent stabilization of commodity prices on a rate-of-change basis. Investor risk appetite appears to have returned following the delay of a Greek default, with the VIX volatility index nearing its cycle low during the week. Interestingly, Portugal's sovereign downgrade went largely unnoticed until Friday's U.S. jobs numbers disappointed. We view this as a good opportunity to get some downside portfolio protection following the strong rally in the last couple of weeks.

For the 13th consecutive week, activity was the most concentrated in the Technology sector, where 199 insiders filed trades having an aggregate market value of $216.7 million. Rounding out the top three sectors were Consumer Discretionary (115 trades for $225.5 million) and Health Care (98 trades for $52.6 million). There was a large spike in activity in the Technology sector, where the number of trades filed was up 115% on the previous week.

The largest open-market transaction of the week was in AZO stock, where 2 insiders sold 282,298 shares for a total of $84.3 million. The biggest buy last week was for 750,000 shares of ETE, worth $31.6 million.

Largest insider buys of the week

Largest insider sales of the week

Insider Trading Wrap-up: Week Ended July 1, 2011

Sun, 03 Jul 2011 06:15:44 -0400

In the week ended July 1, we recorded 527 open-market insider trades at 311 companies having a total value of $1.8 billion. Transaction dollar volume was 87.2% higher than the previous week and 489.5% higher when compared to insider trading activity a year ago. Purchases accounted for 13.5% of all open-market trades last week. Our insider sell-to-buy ratio, which excludes derivative conversions and certain other types of transactions, ended the week at 6.42, up from a previous reading of 3.91. On average, a sell-to-buy ratio below 4 is considered bullish, while readings above 7 are bearish. We remain cautious on the outlook for equities over a 6- to 12-month horizon; however, as was the case in 2007, we do not rule out the possibility of "relief rallies" such as the one that occurred during the week on positive news flow that the crisis appears to be "contained". The proverbial can (whether it be Greece or some other Mediterranean country) can only be kicked down the road for so long.

For the 12th consecutive week, activity was the most concentrated in the Technology sector, where 91 insiders filed trades having an aggregate market value of $66.4 million. Rounding out the top three sectors were Financials (71 trades for $26.4 million) and Consumer Discretionary (65 trades for $127.4 million).

The largest open-market transaction of the week was in SNI stock, where 4 insiders sold 25,720,120 shares for a total of $1.2 billion. The biggest buy last week was for 1,853,540 shares of CAAS, worth $13.5 million.

Largest insider buys for the week

Largest insider sales for the week