From Tom Hua's thread...insider buys at nearly decade lows:
Sunday August 26, 6:55 pm Eastern Time
Insider Buying Falls to Eight-Year Low
By Nick Olivari
NEW YORK (Reuters) - Buying of shares by company executives in their own
companies has dropped to the lowest level in almost eight years, according to Lancer
Analytics.
``Insider sentiment reverted back to bearish territory in July after being relatively neutral in June, said Lon Gerber, director
of research at Scottsdale, Arizona-based Lancer, a division of Thomson Financial, which tracks insider buying and selling as
reported to regulators.
``This change was driven by a dramatic decline in
buying activity, to its lowest level since August 1993.''
Insider buying, measured by the dollar value of shares bought, declined
to $77.9 million in July, or 50 percent, from $154.7 million in June.
The drop continued the declining trend in share purchases by corporate
executives, Gerber said. For the first half of the year, monthly volume
of insider purchasing has ranged from $150 million to $180 million,
consistently well below its five-year monthly average of $322.1 million,
he said.
``It's a clear indication that executives are seeing the world in the same
way as the general public,'' said Scotty George, chief investment strategist at Corinthian Partners Asset Management LLC.
Both ``insiders and the public see the economy in for a protracted period of rest.''
Investors view the aggregate level of buying by insiders -- who have the best access to information on their companies'
prospects -- as an indicator of market sentiment. Insiders presumably buy shares when they consider them a bargain relative
to their companies' future business.
Insider selling, measured by the dollar value of shares sold, in July totaled $2.2 billion, the lowest monthly sales volume since
October 1998. It was also below the five-year monthly average of $3.5 billion.
``We normally do see a substantial drop in the dollar volume of selling in June and July as insiders are typically restricted
from selling near their second-quarter earnings announcements,'' Gerber said.
The dollar value sell/buy ratio, a measure of sentiment according to Gerber, almost doubled to a bearish $28.19 in July from
$15.29 in June, Gerber said. The ratio's historic five-year monthly average is $12.85.
``The increase in bearishness is driven primarily by the steep reduction in executive buying during July,'' Gerber said.
POWER PLAYS
Investors looking for tips from corporate executives buying their own stocks may want to look at the energy sector, Gerber
said, adding that energy insiders historically make well-timed purchases.
Rowan Cos Inc. (NYSE:RDC - news), equipment/services companies Baker Hughes Inc. (NYSE:BHI - news). Chiles
Offshore Inc. (AMEX:COD - news), Apache Corp. (NYSE:APA - news), and Burlington Resources Inc. (NYSE:BR -
news) were all the targets of insider buying in the last month.
Investors may want to avoid technology and financial stocks -- where insider sentiment has turned increasingly bearish,
Gerber said.
Although insider selling of technology remained little changed in July from June at $555.3 million, tech buying dropped to
$2.5 million, down 90 percent from the $42.6 million bought by insiders in June.
Insider buying in the finance sector fell to $12.9 million in July, down 56 percent, from $29.0 million in June. It was the
lowest level of insider in the sector in four years, Gerber said.
Finance sector selling doubled to $393.6 million in July, from $198.4 million in June. |
