8 Stocks with Big Insider Buying, Selling
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.
According to a report out of Bloomberg.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 reasons 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 .
Next: Who Was the Coke Insider?
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.
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.
No other company in the S&P 500 came close to the size of the Coca-Cola insider purchase. The next two largest purchases were at L-3 Communications, where insiders bought 10,000 shares, or $729,000 worth of stock; and Precision Castparts, where insiders bought 3,500 shares, or $497,875 worth of stock. As you can see, insiders continue to buy very little stock when compared to the amounts they're unloading on the open market.
I would also like to point out that during this reporting period, insiders at Precision Castparts sold 44,722 shares, or $6.2 million worth of stock, at an average share price of $138.45 — making the most recent insider purchase of a measly $497,875 pretty insignificant in comparison.
From a technical standpoint, shares of Precision are trading very close to the 50-day moving average of $131.76. A break of this level could put the next support at $127.21 into play.
Keep in mind that since the last insider reporting period when I highlighted the large selling at Precision by its CEO, the stock has dropped from its recent highs of $145.40 a share to its current level of around $133. This is a good example of insider selling by a company's CEO being a red flag.
Now here's a look at the S&P 500 stocks with the largest amount of insider selling.
Insider selling continues to be the heaviest among technology companies. This is a trend that has been seen for a number of weeks now, and the trend is showing up in stocks that have performed well during the recent bull run off of the August lows. The trend is also continuing to show up in the biggest players in the tech complex.
Next: One Company Had Inside Sales of $1.4 Billion (!)
The largest amount of insider selling during this period for S&P 500 companies was found at software giant Microsoft. This company is engaged in developing, manufacturing, licensing and supporting a range of software products and services for different types of computing devices.