Corporate insiders have been buying the dip in stocks in a massive way

Corporate executives have responded to the historic drop in the stock market by backing up the truck and buying all the stock in their own companies that they can get their hands on. You do not get a more bullish signal than this. This means they have a high level of confidence that their own companies will not only navigate this manufactured crisis successfully, but will restore future earnings power:

We can well imagine that “wow” has been uttered by more than just a few people of late – about the spread of the coronavirus, the impact of the virus on share prices and the global economy, and about the change in lifestyle that has taken place in a mere matter of weeks. But for those of us who follow insider-sentiment data from Vickers Stock Research, recent data has led us to a “double-wow”. Two weeks ago, we pointed out that corporate insiders reacted to stock price declines by increasing their purchases of shares in the companies at which they work.

One week ago, we noted that the buying trend continued, and offered up the possibility that insiders might end up buying shares more often than they were selling shares – which is a rare event. This week, we are here to say that we wildly underestimated that possibility. Sell/buy ratios from Vickers are bullish when they are below 2.00. They are very bullish if they are below 1.00, which reflects the rare times when the number of insider purchase transactions is actually greater than the number of sell transactions. For example, a reading of 0.90 is very, very bullish. 

So what are the readings today? Based on very heavy transaction volume, Vickers’ benchmark NYSE/ASE One-Week Sell/Buy Ratio is 0.33 and the Total one-week reading is 0.35. Insiders are not just buying shares, they are devouring shares. Insiders behaved in a similar fashion in late-December 2018, after stocks crashed on Christmas Eve; in early 2016, when stocks also corrected; and in late 2008/early 2009, at the depths of the Great Recession correction. Those were spectacular times to buy stocks. Insiders seem to be telling us that today offers a similar opportunity. 

Highlights of massive insider share purchase in recent days have included: the CEO and other Directors at Dow Inc. (DOW) collectively buying $1.2 million worth of shares; Katherine Blackburn, a Director of Fifth Third (FITB), buying $994,000 worth of shares; Murry Gerber, a Director of Halliburton Co. (HAL), buying $1.1 million worth of shares; Andrew Feldstein, a Director of PNC Financial Services (PNC), buying $2.5 million worth of shares; and Charles Scharf, CEO of Wells Fargo & Co. (WFC), buying $5.0 million worth of shares.

At the end of the day, the Great Baby Boomer Shutdown is going to cost trillions of dollars and will probably not involve even a small fraction of the loss of life that normal plagues and accidents cause in developed nations. The Boomers will just toss it on the nation’s credit card and let their grandchildren figure out what do with their debt to China after they are long gone.

By the time Boomers finally, finally, finally shuffle out of politics, they will probably have saddled future generations with $30 trillion of debt from endless foreign wars, entitlement programs approaching insolvency, and their various fake Armageddons and conspiratorial investigations. But they got to amass an enormous amount of personal wealth, so it’s all good.

No wonder the only man with a powerful soapbox to point this out passionately wants off this planet.

2 thoughts on “Corporate insiders have been buying the dip in stocks in a massive way

  1. It is certainly plausible that they are acting as if they just discovered their company’s stock in the remainder bin at Walmart. But another thing to look at is corporate stock buybacks. According to today’s WSJ, some companies are extending them for the obvious reason, but others are suspending them to retain cash at a very uncertain time. I think the way to read the net consensus on this is that they are really unsure of what is going to happen next.

    Liked by 1 person

    1. So I think this is 100% a gamble on corporate bailouts. I am always mindful that the things that seem bullish are not in new circumstances. But it is interesting that they are so … motivated. One assumes they are connected and have been promised something.

      Like

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