BALTIMORE (Stockpickr) -- Insider selling has officially hit record levels, and the corporate dumping of stock isn't just in S&P 500 companies. Last week's insider selling hit an all-time weekly record of $4.5 billion, according to insider tracking company InsiderScore.com. Prior to that, no previous week had seen more than $2 billion in net selling. In S&P 500 companies alone last week, insiders sold an unbelievable $2.8 billion worth of stock. That selling was more than four times the amount seen in the prior week for S&P 500 companies.
Corporate insiders are likely taking advantage of two-year highs in stock prices to sell their stocks into strength. There has also been a lot of speculation that insiders are dumping stock at such record levels because of the uncertainty surrounding whether the Obama administration is going to extend capital-gains tax cuts initiated under the previous administration.
Both of these reasons are good excuses for insiders to sell stock. As investors, though, we also have to consider that insiders are unloading stock because they believe the future could be less than bright for market prices.
>>Also: 9 Insider Sales Raising EyebrowsAccording to a report out of Blooomberg.com, the week ending on Nov. 9 saw corporate executives at 125 companies in the S&P 500 sell stock, with sellers far outnumbering buyers, by more than 12 to 1. Insiders can have tons of reason to sell a stock, but they only buy for one reason: They think the stock will go higher. As far as insider buying goes, there was only one company in the S&P 500 that saw any notable action, and that was Coca-Cola (KO). A corporate insider at Coke purchased 120,000 shares, or $7.4 million, at an average price of $61.52 a share. That insider was board member Barry Diller, who is also the CEO of IAC/Interactive (IACI). I like this purchase since Diller is a high-profile executive, but I like this move even more because shares of Coca-Cola are trading near a 52-week high as I write this. >>Also: 3 Stocks That Could Benefit From Buybacks Diller could see a slowing economy in the future and rising food prices due to quantitative easing. The market has already started to see explosive commodity and grain prices off of QE2, so if that continues and if quantitative easing fails again like it did the first time, then shares of Coca-Cola could be much higher a year or two from now.
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