This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Watch Job-Search Selling for Buys

This column was originally published on RealMoney on Nov. 18 at 12:44 p.m. EST. It's being republished as a bonus for readers.

Investors love to see insider buying in the stocks of companies they own and abhor insider selling. But it turns out that selling in one group of stocks -- the job search and recruitment companies -- may actually serve in a perverse way as a positive signal, according to the results of new research from Thomson Financial.

The Thomson study uncovered an intriguing link between labor market trends and insider selling at job search companies like Robert Half International (RHI - Get Report) and Administaff (ASF). Whenever selling at these kinds of companies hits extreme highs, overall U.S. job growth increases on average, over the next year or more.

The study, called "Insiders Foresee Changes in Unemployment Rate," found that when selling increases enough, unemployment falls over the next 12 to 24 months by anywhere from 3.2% to 5.7%.

So what does insider selling in this group say now about future employment trends? Insiders are selling at near-extreme levels once again -- suggesting further strength ahead for both the job market and recruitment stocks, if history is a good guide.

Robert Half International insiders, for example, dumped more than $41 million worth of stock since late July. At Administaff, insiders sold a hefty $13 million since the end of August. And at Kelly Services (KELYA - Get Report), top execs sold more than $5 million worth of stock since the end of July.

All of this selling, however, makes you wonder: Exactly why would insiders be dumping such large positions if future labor market trends are about to make their business even stronger?

Thomson's Mark LoPresti, the author of the study, takes the unconventional view that strong labor markets are actually bad for job search companies. He reasons that tight labor markets make it easier for people to find work -- so they sidestep the job search companies.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
HSII $24.07 -0.54%
IBM $160.75 0.97%
KELYA $17.05 0.12%
RECN $17.22 0.44%
RHI $60.23 0.22%


DOW 17,689.94 -28.60 -0.16%
S&P 500 2,057.70 -3.35 -0.16%
NASDAQ 4,865.3180 -11.2010 -0.23%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs