The Insider Selling Question
Source: http://feedproxy.google.com/~r/qvmgroup/yrMF/~3/-tvEk7J_mj8/3708Posted on Monday, May 4th, 2009 | In Market Commentary
The ratio of share sales to share purchases by US insiders shot way into bear territory at the height of the stock market rally in the US stock market during April.
The net sales spike was much higher than at any time in the past year.
As of late that ratio has fallen back into a neutral range. How should that be read? Did the insiders see buyers overpaying for their company shares? Did the insiders want out while the getting out was good? Did the insiders decide they themselves were wrong and then reduce selling as the rally continued? Did they reduce net selling, because they had satiated their desire to have less portfolio exposure to their own companies?
The spike phenomenon of insider selling was dramatic and counter rally, but short-lived. We are forewarned by somewhat uncertain what to make of it, except to believe that if executives believed their companies were off to a new bull market, they would be buying, not selling.
We haven’t looked into it yet, but we suspect a large dose of the sellers were banking executives who are not wholly confident that investor enthusiasm for banks will persist in the near-term.
click image to enlarge
from Barron’s Market Lab
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 About Richard Shaw (http://www.QVMgroup.com)
Richard is a principal of QVM Group LLC, a fee-based investment advisor based in Connecticut with clients across the country. He provides investment coaching to "do-it-yourself" investors, and manages portfolios for those who prefer not to make their own decisions. His investment approach is based on value, asset allocation, benchmarking, expense control, risk management, customizing portfolios to each client's specific circumstances, and regular communication about strategy and performance. The QVM Group team also provides municipal refinance services, strategic business planning and financial analysis service for new ventures, private acquisition analysis, and custom investment research. Richard's extensive experience, includes serving on the Board of Directors of Aberdeen Asset Management PLC (London Stock Exchange: ADN), membership on the Board of Directors of Phoenix Investment Counsel (renamed Virtus Investment Advisors), a U.S. pension manager and investment advisor to the Phoenix Funds (renamed Virtus Funds), as well as serving as Managing Director of a series of offshore investment funds based in Luxembourg. He has led institutional asset management sales and had overall responsibility for management of a U.S. mutual funds broker-dealer. He was a charter investor and member of the Board of Directors of several internet companies, including Lending Tree prior to its IPO. He is a graduate of Dartmouth College. QVM Group LLC is a Registered Investment Advisor. Visit the QVM Group website http://www.qvmgroup.com/QVMinvest/ |
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