• 142 days Could Crypto Overtake Traditional Investment?
  • 147 days Americans Still Quitting Jobs At Record Pace
  • 149 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 152 days Is The Dollar Too Strong?
  • 152 days Big Tech Disappoints Investors on Earnings Calls
  • 153 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 155 days China Is Quietly Trying To Distance Itself From Russia
  • 155 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 159 days Crypto Investors Won Big In 2021
  • 159 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 160 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 162 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 163 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 166 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 167 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 167 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 169 days Are NFTs About To Take Over Gaming?
  • 170 days Europe’s Economy Is On The Brink As Putin’s War Escalates
  • 173 days What’s Causing Inflation In The United States?
  • 174 days Intel Joins Russian Exodus as Chip Shortage Digs In
  1. Home
  2. Markets
  3. Other

The Least Surprising Stat Of The Week: Corporate Insiders Are Dumping Their Stock

Here's one for the "actions speak louder than words" file:

Massive insider selling spurs stock market concerns

(CNBC) - Corporate insiders have been selling their shares at near-record levels, and according to some, this could be a sign for outside investors to start selling as well.

Investment research firm TrimTabs reported on Wednesday that insider selling reached $7.6 billion for the month of November, the fourth-highest monthly level on record. For some this may be an alarming indicator, as corporate insiders tend to have more knowledge than public shareholders on the inner workings of the company, and what may drive stock prices up or down.

"Historically when insiders are selling heavily it's not the greatest sign," TrimTabs' chief executive, David Santschi, told CNBC in a phone interview Wednesday. "I'm surprised given the valuations in the market that they're not selling more than they are."

According to Todd Gordon of TradingAnalysis.com, this combined with widening disparities in stock leaders and laggers could spell some short-term trouble for the market.

Why isn't it a surprise that insiders are bailing? Because they see the reality of their businesses up close and personal. Revenues have been falling for the past year in many industries and have absolutely cratered in commodities. See the New York Times' If it owns a well or a mine, it's probably in trouble.

And after years of boosting reported profits with various kinds of financial engineering, corporations seem to have run out of tricks. Earnings have begun to reflect reality, and it's not pretty:

Corporate profits Dec 15

Remove all the identifying information from this chart and the trend still screams "sell". So the question, as noted above, isn't why are they bailing, but what took them so long?

And remember that insiders are selling while the corporations they run continue to buy back huge numbers of shares with borrowed money. The implication? They're supporting their stock in order to get out while the getting is good.

 

Back to homepage

Leave a comment

Leave a comment