If you guessed that corporate insiders were snapping up stocks in January as the investors tossed them out, you would be dead wrong. According to Thomson Financial, insider buying last month totaled just $35 million, barely more than one-third of December's anemic $95 million and one of the lowest monthly buy volumes on record.
Only 4 million shares were purchased by 532 executives in 273 companies, a level of disinterest that is very unusual when stocks are falling. Last August, for instance, when stocks were plunging to their lows of the year, executives jumped in and bought more than they had in any single month in the prior two years.
At the same time, Thomson calculates that insiders sold $1.9 billion worth of their companies' shares in January. That was a relatively low count, especially when measured against $4.9 billion in sales in December. But when you add the two sides of the equation up to reach the dollar sell-buy ratio, a measure of investor sentiment, it amounted to a whopping $55 last month. In other words, for every dollar of stock that insiders bought, they sold $55. Thomson says that is the most bearish monthly reading it has witnessed in the past decade. To provide another perspective, a multiple of $20 has historically been considered a bearish extreme.
It should also be noted that the pace of buying picks up in February once earnings season is out of the way and executives are not handcuffed by rules.
Some of the more noteworthy sales -- and major disposals came left and right -- included 70,000 shares of
by general counsel Barbara Caulfield, netting $2.6 million; 55,000 shares of
St. Jude Medical
by CFO John Heinmiller, netting $2.1 million; and 135,424 shares of
sold by Executive Vice President John Worley, netting $6.8 million.
There were a few substantial insider buys last month. William Lyons, chief executive of
William Lyon Homes
( WLS), purchased 655,569 shares, while
boss Aubrey McClendon bought 50,000 shares.
Chairman Sumner Redstone also kept up his torrid pace of buying shares of
( MWY), adding 263,000 shares.
One of the more interesting cases of buying on weakness came in technology when Lawrence Lacerte bought 20,000 shares of
at around $7.57, which is down from $14 a year ago. Generally, though, the list of buyers was very slim.
If there isn't the customary February pickup in buying, insider activity will be one more major arrow in the quiver for bears who question the valuation support of the 2005 market.
Jon D. Markman is publisher of StockTactics Advisor, an independent weekly investment research service, as well as senior strategist and portfolio manager at Pinnacle Investment Advisors. He also writes a weekly column for CNBC on MSN Money. While Markman cannot provide personalized investment advice or recommendations, he welcomes column critiques and comments at
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