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Insider Selling Ratio Update: 41 to 1.

  • Written by Syndicated Publisher 419 Comments419 Comments Comments
    June 29, 2011

    Nothing new in the latest S&P 500 insider selling (and occasional buying). There were 2 (count them: two) purchases of stock by corporate insiders, of which one, which accounted for 97% of all purchases, came from Berkshire Hathaway. As usual selling dominated, with a ratio of 41 in notional sales to buys.

    And while we have been exposing this relentless dumping by insiders for years now, TrimTabs has added some voice to these ongoing warnings in which insiders sell their holdings to far less knowledgeable investors who are happy to burn “other people’s money.” Specifically, TrimTabs looks at the corporate share repurhcase-to-insider stock buying ratio, and gets some shocking results, namely that companies that have enacted $168 billion in corporate buybacks in 2011 have matched this with just $10 million in insider buying, a 16,800-to-1 ratio.

    Corporate insiders are using little of their own money to buy shares in their companies, even as their companies announce large share repurchases, reports TrimTabs Investment Research, indicating that corporate insiders have little confidence that their company stock price is going to rise.

    In a research note, TrimTabs reported that companies have announced a solid $124 billion in stock buybacks in Q2 2011, yet insiders have used less than $2 billion of their own money to buy stock in the quarter, one of the highest ratios of announced company share buybacks to insider stock purchases since TrimTabs began keeping records in 2004.

    We’ve never seen such a sharp contrast between what insiders are doing with their own money and what they’re doing with the money of the companies they manage,” said Charles Biderman, CEO of TrimTabs. “The best-informed market participants seem worried about what will happen to the economy when the Fed stops printing money,” Biderman said.  “While insiders are willing to use corporate cash to try to support the value of their stock-based compensation, they don’t seem to think their stocks are attractively priced.”

    The ratio of announced stock buybacks to insider buying topped 70 in the first two quarters of this year,” noted Biderman.

    “They were by far the highest levels in our records.  How many of the analysts and journalists, cheering the big buybacks, realize that the people rolling them out aren’t buying anything themselves?”

    TrimTabs data shows that insider buying has occurred at just six of the 30 companies with the biggest announced stock buybacks this year, totaling $168 billion dollars.  The insider buying at these six firms amounted to less than $10 million, making for an announced-buyback-to-insider-buying ratio of 16,800 to 1.

    Here are the biggest transgressors.


    With virtually no corporate insider willing to put their pesonal money where their corporate cash is, how can America be expected to have any faith in what David Rosenberg yesterday called the “artificial recovery”?

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    Insider Selling Update: 2 Buyers, 50 Sellers; Ratio Of Corporate Stock Buybacks To Insider Purchases: 16,800 To 1 | zero hedge.