Insider Activities

Insider buys – of stock – at market price – are a very useful indicator of either an undervalued stock or potential good news or, at the least, an indicator that some insiders are at least more inclined to work for the benefit of shareowners rather than just to rob them blind.

I also think that insider sales are important. All the hoohaa about “diversifying the portfolio” and such is just rubbish. Usually used to excuse/justify/rationalize pay levels that are far too high anyway, leveraged towards options/volatility rather than shareholder returns, and/or obfuscate the reality that the stock is just plain overpriced. If insiders are selling in any serious quantity, then why on Earth should I buy at that price?

Currently, there is very little insider buying — and a lot of insider selling. Not exactly an indicator that we are anywhere near “cheap” valuations.

Some companies with (moderate) buying over the last 30 days — Blackrock (BLK); Monsanto (MON); Valhi (VHI); Cymer (CYMI)

Some companies with heavy selling over the last 30 days — Credit Acceptance (CACC); Oracle (ORCL); Google (GOOG); Ralph Lauren (RL); McKesson (MCK); Pepsi (PEP)

A perfect example of the sleaziness that insider selling often reveals. Six weeks ago, Credit Acceptance announced a $200 million stock buyback. Insiders (mostly the Chairman of the Board) have sold $190 million of their stock options since then. What a bunch of freaking crooks.

Not too many “themes” that I can see except that some of the buys may be worth a closer look.


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