By: Larry MacDonald
As stock markets tumble, company insiders are loading up big time. That’s one bullish sign amidst all the gloom (insider trading is most predictive for 12-month periods, according to studies).
In the United States, the Vickers Weekly Insider Report recently reported insiders sold 1.7 shares for every one bought (8-week moving average basis). This compares to the historical average of 2 to 2.5 shares sold for each share bought.
In Canada, INK Research’s indicators of insider sentiment recently jumped to “another record high.” On the Toronto Stock Exchange (TSX), every company with a sell-only filing was matched by three companies with a buy-only filing. Sectors leading the way were energy and materials.
The sector lagging the most on the TSX was financials – do bank insiders know of bad news on the way? IGM Financial and Royal Bank of Canada had the highest amount of net selling in the sector over the last two months. However, Power Financial bucked the trend and had the fourth highest net buying of ALL companies on the TSX.
8 Responses to “ Insiders optimistic ”
Good call Larry, I’ve been keeping an eye on SEDAR for insider purchases, and interestingly, however not too surprisingly the insider buys on a lot of oil and mining companies, are higher than normal. My conclusion is that a lot of these companies especially on the TSX-V are becoming so cheap, they are becoming… undervalued. The other twist side is a lot of retailers are unable to truly value a company like these insiders that know the ins outs.. especially for their own business. I think its time Canadian investors get educated especially in this area so that we can assess these depressed prices, and do something about it. I read an article on how to put value to these companies, thought it might be helpful for all the investors in the dark. See link here
By OilyGasMiner on Sep 23, 2008
Oops forgot the link, see here http://www.stockresearchportalblog.com
By OilyGasMiner on Sep 23, 2008
Great article. Is there a link to the list of companies insiders are buying?
By sliman on Sep 24, 2008
sliman
The info is available at http://www.inkresearch.ca but you may need to subscribe.
LM
By Larry MacDonald on Sep 24, 2008
I wouldn’t read too much into insider selling. Insiders may sell for many reasons that may not necessarily mean they are bearish. But they buy for only one reason — they are bullish. It’s interesting that resource company insiders are buying.
By Canadian Capitalist on Sep 24, 2008
If you are interested in investing in companies that buy back their shares this PowerShares Buyback Achievers™ Portfolio (Fund) ETF may be of interest you.
http://www.invescopowershares.com/products/overview.aspx?ticker=pkw
cheers
Neil
By Neil on Sep 30, 2008
We’re using different definitions of the word benchmark. ,
By JXL20 on Oct 22, 2009