As the Dow, Nasdaq, and S&P have been steadily climbing over the past few months and showing snapshots of recovery, the truth of the matter is that insiders have used this rally to sell their shares at record rates. Last week alone, insider selling reached $662 million while insider buying was only $1.6 million. That is a sell to buy ratio of 423:1.
Does that sound like CEO's truly believe in the value of their companies and in the economic recovery?
In a Zerohedge report citing Bloomberg from the week ending October 29th, they attest that this insider selling is reaching record levels.
What is more important is the denominator side of the fraction, as the total selling over the week hit what appears to have been a near-term record, at a total of $662 million. Biggest selling continues to take place at the (no surprise here) tech names which continue to be bid up by investors hoping a return of the dot com bubble.
A CNBC report from last week shows that two tech firms, Google and Oracle are also selling off shares from insiders at massive levels.
The sell-off at two tech companies that has been persistent for weeks continued to show up in the most recent filings. Insiders at Google [GOOG 617.40 2.40 (+0.39%)] sold 189,843 shares, or $113.7 million worth of stock, at an average price of $598.81. Clearly, the insiders at Google are taking advantage of the stock's strength, with shares only 13 points off its 52-week high of $629.51. However, this persistent heavy selling is turning into a big red flag. All of this pressure could lead to some weakness in the near term, considering that the selling has not let up.
Insiders at Oracle [ORCL 29.37 0.24 (+0.82%)] dumped 3.5 million shares, or $100.6 million worth of stock, at an average share price of $28.93. Oracle CEO Lawrence Ellison continues to be the insider at the company who's dumping a lot of stock onto the open market. It looks like Oracle has technically put in a near-term top at around $29 a share. Investors might want to watch for a pullback in this name toward $26.50.
When you see company insiders selling their stock at incredible rates, while few insiders are buying, you have to really question what they think of their own companies growth, and even more, what they see of the economic future since they value cash far more that the tax shelter of holding stock.
Comments