20 Stocks With Big Insider Selling
WINDERMERE, Florida (Stockpickr) -- The selling being done by corporate insiders of S&P 500 companies has a momentum that seems unstoppable. According to a report out of Blooomberg.com, the week ending Oct. 29 saw one of the highest amounts of corporate insider selling in S&P 500 companies on a weekly basis for all of 2010. A total of $662 million in stock was sold in the open market last week -- and a paltry $1.6 million was purchased -- by the people who know the most about the future prospects of their companies.
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The buyers once again aren't buying anywhere near the dollar amount of stock that the sellers are selling. Last week, the most significant insider buying was seen at
American Express
(AXP) - Get Report
,
Procter & Gamble
(PG) - Get Report
and
QLogic Corp
(QLGC)
. Insiders at American Express purchased 20,000 shares, or $787,658 worth of stock, at an average price of $39.38. Insiders at Procter & Gamble bought 6,423 shares, or $407,534 worth of stock, at an average share price of $63.45, and insiders at QLogic bought 10,000 shares, or $169,300 worth of stock, at an average price of $16.93.
These three buys just aren't enough for me to get excited about corporate
. Not one purchase even came in above $1 million. This continues to show that insiders at S&P 500 companies have little to no interest in buying stock in their companies.
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On the other hand, insiders continue to sell stock like crazy. Here's a look at some of the
S&P 500 stocks with the largest amount of insider selling
.
Enterprise software player
Oracle
(ORCL) - Get Report
, which saw the largest amount of insider selling last week, is not a new name to the insider-selling list. Corporate insiders at Oracle sold 7.8 million shares, or $210.9 million worth of stock, at an average price of $28.95.
The insiders at Oracle are apparently taking advantage of selling their stock into strength, with shares trading very close to its
of $29.71. But my take, since Oracle has shown up so many times on the insider-selling list in recent weeks, is that Oracle insiders probably don't see a ton of upside left in their stock.
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It's also worth noting that the guy who would know the most about the company, CEO Lawrence Ellison, continues to be a big seller of the stock.
From a technical standpoint, shares of Oracle have been struggling for the past two weeks with getting above $30 a share, while at the same time, insiders have been dumping stock regularly. Now, this doesn't mean the stock can't go higher, but if the Oracle insiders continue to flood the market with a supply it will continue to leave an overhang on the shares.
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Personally, I would have a hard time pulling the trigger from the long side on Oracle when insiders are selling so much stock -- and so persistently. For me, the insider selling at Oracle is moving the stock into "red flag" territory.
Another tech name that saw big insider selling last week was
Apple
(AAPL) - Get Report
. Corporate insiders at Apple sold 197,125 shares or $60.5 million worth of stock, at an average share price of $306.72.
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So far year-to-date, Apple shares are up 47%, but the stock is currently trading about 9 points off its 52-week high of $319 a share. My take is that Apple insiders are also taking advantage of the strength in their stock to book some profits.
From a technical standpoint, I wouldn't get concerned about the price action in Apple unless the stock broke below some key support at around $300 a share. If you're a bull on the stock, then I would definitely want to see Apple take out its pre-earnings highs of $319 sometime in the next few months.
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Three more large tech players that showed up on the insider selling list last week were storage player
EMC
(EMC)
, network infrastructure company
Juniper Networks
(JNPR) - Get Report
and information technology king
IBM
(IBM) - Get Report
. Insiders at EMC sold 999,847 shares or $21 million worth of stockm at an average share price of $21.08. Insiders at Juniper Networks sold 577,500 shares or $18.3 million worth of stock, at an average price of $31.76 and insiders at IBM sold 101,046 shares or $14.2 million worth of stock, at an average share price of $140.57.
It's worth nothing that the Juniper's chairman of the board Scott Kriens was one of the big sellers at that company, and the chairman, president and CEO of EMC, Joseph Tucci, was also a significant seller. I never like to see such significant insiders dumping a lot of stock.
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Even more insider selling was seen among well-known tech names such as cloud computer players
Citrix Systems
(CTXS) - Get Report
and
Salesforce.com
(CRM) - Get Report
. Insiders at Citrix Systems dumped 150,000 shares, or $9.1 million worth of stock, at an average share price of $60.98 and insiders at Salesforece.com sold 70,670 shares, or $8 million worth of stock, at an average share price of $113.64.
What's interesting here is that all of these companies, as well as Oracle, operate in the information technology sector. Could this heavy selling among so many IT leaders be a tell that this sector is going to see a slowdown a lot sooner than many market players are expecting? Only time will tell, but it sure isn't a confidence-building move by these insiders to be dumping so much stock all at the same time.
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One new name that showed up on the insider-selling list was manufacturer of complex metal components and products
Precision Castparts
(PCP)
. Insiders at Precision Castparts sold 181,300 shares, or $24.7 million worth of stock, at an average share price of $136.07. This stock has been another big winner year-to-date, with shares up around 30%.
What I really don't like about the insider selling at PCP is that the chairman and CEO Mark Donegan was one of the top sellers. Again, as a rule, I never like to see the most knowledgeable person at a company selling large amounts of stock. And to me, it doesn't matter if it's the exercising of options or an open market sale of stock. Corporate insiders book profits at a certain level for a reason, and that reason usually isn't because they see a ton of upside in the future. Of course, it's always important to see how much of their overall stake in the company the insiders have sold, and you should evaluate the timing of any sale on a stock chart.
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From a technical standpoint, shares of Precision Castparts are running into some overhead resistance at around $141 share. In order for the uptrend in this stock to continue, it will need to take out that resistance level -- or a selloff back towards previous support around $135 to $133 could be in the cards.
The bottom line: Insider selling isn't a tell-all indicator. I like to look at it as a trend indicator, where if the trend in selling is consistent and the buying is not showing up, then it should be viewed as a red flag. That is the current trend we're seeing right now, no doubt, but that doesn't mean that stocks are about to fall off a cliff. Often the insiders can be a bit early in the timing of their sales.
To see more stocks with heavy insider selling, including
McDonald's
(MCD) - Get Report
,
Coca-Cola
(KO) - Get Report
and
Apollo Group
(APOL)
, check out the
Top 20 S&P Stocks With Big Insider Selling
portfolio on Stockpickr.
-- Written by Roberto Pedone in Winderemere, Fla.
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At the time of publication, author had no positions in stocks mentioned.
Roberto Pedone, based out of Windermere, Fla., is an independent trader who focuses on stocks, options, futures, commodities and currencies. He is also an outside contributor to Beconequity.com and maintains the website Maddmoney.net, which he sold to Blue Wave Advisors in 2008. Roberto studied International Business at The Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany.
