Yep..and that should be one tough order to fill.
$22.9 BILLION, OR $5.7 BILLION WEEKLY, OF NEW OFFERINGS PAST 4 WEEKS.
While the demand side of the trading float equation had decent amount of buybacks and no cash takeovers, the supply side looks to be strong in both new offerings and insider selling.
There were $5 billion of new offerings last week, again almost half being convertibles. Over the past four weeks there have been $22.9 billion of new offerings sold, or $5.7 billion weekly. That $5.7 billion weekly pace annualizes to $300 billion - which is equal to 2% of the current $14 trillion market cap.
That $300 billion annualized rate is well above the $259 billion new offering record established last year - when the market made a top primarily due to huge levels of share sales by companies and insiders.
OUR GUESS IS INSIDER SELLING IN NOVEMBER COULD HIT $20 BILLION, OR $5 BILLION WEEKLY.
We do not know how many shares insiders are currently getting rid of. In September, there was very little insider selling, just $5 billion in aggregate, as it was perceived as unpatriotic for insiders to sell shares right after September 11. However, those insiders who wanted to sell probably have now done so by now.
Over the first eight months of this year, insider selling has averaged about $15 billion monthly. Our guess is that in November insider selling could hit $20 billion, up from an estimated $10 billion in October, given the significant rally in stock prices and the huge rate of new offerings.
Our insider selling estimate currently is double the #144 shares sold. Not all insiders have to file a #144 form when selling shares. Officers, directors and major shareholders have to report each sale. However, smaller insiders do not when their holdings are covered under a already existing company wide filing with the SEC. During 1998, 1999 and 2000, we estimated that other then #144 insiders made up 60% of all insider selling. With the plunge in market price of those tech stocks with huge amounts of options outstanding, as well as the end of the "unlocking after a successful IPO game" there's been much less selling by non #144 insiders.
TRADING FLOAT LIKELY TO GROW BY $5 BILLION WEEKLY VS. $3 BILLION RECENT PACE.
The trading float appears to have been growing by $3 billion weekly over the past month. Buybacks, at $6.8 billion, plus $700 million of cash takeovers equals a float shrink of $7.5 billion weekly. New offerings, at $5.7 billion, plus insider selling of $5 billion equals $10.7 of new shares. The net growth is just over $3 billion.
That $3 billion weekly was in the past. Our guess is that is more likely for the hefty pace of new offerings and insider selling to continue than buyback announcements. Therefore, going forward, we would estimate the trading float could grow by $5 billion weekly as we approach year-end.
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Best,
John M |
