What Corporate Insiders Are Telling Us

by Alexander Green, Chief Investment Strategist

Last week, Vickers Weekly Insider Report noted that corporate insiders are dumping shares like there’s no tomorrow.

Insiders sold 6.31 shares for every share they bought. Contrast that with the seemingly brilliant move insiders made at the market low in March, buying three shares for every share they sold.

Some analysts are saying there is only one interpretation to this recent turn in insider activity: The market is due for a spill.

But not so fast…

Do Corporate Insiders Really Have All the Answers?

Let’s start with an obvious fact: To a great extent, the future is always cloudy. Corporate insiders don’t know what the market is going to do any more than you or me.

For example, Vickers was already ringing the alarm back in July,

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Fifth Third disposes majority stake in processing unitOn June 30, Fifth Third Bancorp (FITB) sold a 51% stake in its processing business to Advent International, the leading global buyout firm. The deal is valued at $2.35 billion, before any valuation adjustments.The deal was announced in March this year. Fifth Third will retain the remaining 49% stake in the new company and will also keep its credit card issuing business, including retail credit card and commercial multi-card services.We are encouraged with this transaction, as it will enable Fifth Third to focus more on its core business while boosting its Tier 1 common equity.Fifth Third will realize a pre-tax gain of around $1.7 billion or $1.0 billion post-tax on the transaction. Approximately $1.2 billion will be contributed from this transaction to the bank's Tier 1 equity. ...

Even as investors awaited anxiously the release of the stress test results, Asian markets rose to fresh seven-month peak amid optimism that the global economy is on a path to recovery.  However, gains in Asia were modest as media reports suggested about 10 of the 19 banks undergoing stress tests in the U.S. have been directed by regulators to raise more capital. Oil prices hovered near $54 on optimism about the economy.

The Hang Seng index in Hong Kong ended the day up 49.03 points, or 0.3%, at 16,430.08.  The Shanghai Composite Index in Mainland China edged up 0.3% to 2,567.34, its highest close in nine months.  Japan's Nikkei 225 Stock Average added 1.7% to close at 8,977.37.

On Tuesday, U.S. stocks advanced as better-than-expected housing data and comments from U.S. officials that the Obama Administration is not seeking additional funds for banks boosted sentiments.  Investors heaved a

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US stocks ended another week on a winning note as earnings reports, although not great by normal standards, and a consumer sentiment survey indicated the economy and financial markets are showing signs of stabilization.  The Dow Jones industrial average closed the week up 47.95, or 0.6%, at 8,131.33. The Standard & Poor's 500 index rose 13.04, or 1.5%, to 869.60.  The tech-heavy Nasdaq rose 20.53, or 1.2%, to 1,673.07.  The broad-based S&P 500, which recorded its steepest six-week gain since 1938, is now up 29% since hitting its 12-year nadir on March 9.

As risk appetite grew treasuries declined, taking the yield on the 2-year to 0.981% and the 10-year to 2.953% as prices fell 4/32 and 30/32, respectively on Friday. The Vix, CBOE's volatility index, declined 2.59 points over the week, closing at its lowest in seven months and the week's success with IPOs Rosetta Stone (NYSE:RST) and

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Asian markets rose for a fourth day amid a global rally in stocks as hopes that the worst of the economic crisis is over boosted demand for riskier assets.  Investors continued to look at the bright side of things, shrugging off a U.S. jobs report on Friday which showed unemployment rose to 8.5% in March.  Although the numbers were up from 8.1% in February, they were only slightly worse than expected.  Sunday's launch of a long-range missile by North Korea appeared to have little impact on the markets and was seen as having little economic implication.  Boosting the sentiment further were U.S. Federal Reserve Chairman Ben Bernanke's comments that policies to ease the financial crisis through infusion of billions of dollars in aid were beginning to work. 

Japan's Nikkei 225 stock average closed up 108.09 points, or 1.2%, to 8,857.93, while Hong Kong's Hang Seng jumped 452.35 points,

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The big news from the Fed today was its intention to buy more debt-related securities.

Specifically, the Fed will purchase up to an additional $750 billion of agency mortgage-backed securities. Furthermore, the Fed will purchase up to $300 billion of longer-term Treasury securities over the next six months.

The announcement was a surprise not only because of the decision to actually buy treasuries, but also because of the sharp increase in the amount of money being spent to buy agency debt. The Fed is more than doubling the size of its purchase programs.

This is a bold move and is specifically designed to push yields down and make credit widely available.

The markets are clearly applauding the move with stocks soaring. Financial stocks, such as Hartford Financial Services (HIG) and Huntington Bancshares (HBAN) added to their intraday gains. Cyclical stocks, like

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Highlighted in this post are Wells Fargo (WFC), Citigroup (C), BankAmerica (BAC), Regions (RF) and Huntington Bancshares (HBAN).If Mortgages Continue to Moderate, Better Get Your Credit Score StraightRecently, Bill Gross, co-CEO of Pimco Bond Fund, stated the he anticipates the government will take action to shore up the economy and improve the housing climate.Government initiatives, which could be announced relatively soon, could include an additional injection of capital into the neediest of financial institutions and an expansion of the Term Asset-Backed Securities Loan Facility (TALF), which focuses on unfreezing the asset-backed  securities (ABS) market. This would potentially put commercial mortgage-backed securities back in favor to investors as an attractive investment.Also, if the government began to be a buyer of Treasuries, this would theoretically put a cap on the 10-year Treasury rate at some point, thereby encouraging ...

Tontine PartnersTontine Capital Partners - Holding AnalysisThis post is being written as part of HedgeFundBlogger.com's Investment Securities Tool which analyzes the holdings of hedge fund managers.If you're unfamiliar with Gendell and his Tontine Partners, then here's what you need to know. Founded 11 years ago, Tontine is a $10 billion fund ran by Jeffrey Gendell. He specializes in macro investing and takes very large, concentrated positions in companies he feels will benefit from those macro themes. Additionally, he will take on an activist role when necessary, to ensure shareholder returns. The fund has posted returns in excess of 100% in both 2003 and 2005.So, let's get right down to it... what was Jeffrey Gendell ...

The big story over the last couple of days continus to be oil. Yesterday, oil prices tanked by more than $5 after China raised the domestic price of refined products (gasoline, diesel, etc.). Why would that matter? The idea is that if more consumers have to pay the “real” price of energy (China, Malaysia, Venezuela, and other countries subsidize or cap the price of energy products for their citizens), energy use will fall and so will energy prices. Today, oil prices have come bouncing right back (+$3.50 or so as I write) amid reports that Israel is contemplating an attack on Iran’s nuclear facilities. That kind of volatility really gets the market’s blood pumping.

The other big news of the week? Many companies in the financial sector continues to plumb new depths. Almost every day, we hear about fresh losses, more capital raisings, and more regulatory trouble. The regional banks …