Despite the recovery in bank profits the recession on Main Street is still very much alive. One of the most disturbing trends during the recession has been the extremely low level of insider buying. The latest data on insider buying and selling showed mixed signals. Total insider buying spiked substantially to $103.8B, but was boosted by purchases in private equity firm MatlinPatterson of Flagstar Bancorp which is now a penny stock. Purchases in Orbitz Worldwide accounted for over 75% of the remaining buys. Total sales remained high at 250.1MM vs last week’s $255MM in purchases.
Although misleading the latest data is a bit of an improvement. Insiders have been opportune buyers at several other previous market dips so it will be informative to track data in the coming weeks to see whether insiders come back to the market as the market rally loses steam.
All in all, the low levels of buying and continued high selling likely represent the weak state of corporate income statements and balance sheets as insiders see low levels of hiring and weak organic revenue growth. The current earnings season, though well above analsyt’s expectations, continues to show very weak signs of revenue growth with total revenue ex-financials at just 1% year over year.
Notable buying included a large purchases in shares of Orbitz Worldwide:
Selling was once again broad, but several notable sales in regional banks stood out including sales in M&T Bank and BB&T bank.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.