The latest insider trading data continues to show a very stark contrast between the buying and selling trends. For the latest week insiders sold $1.4B in stocks while insiders purchased just $83.17MM. Selling rose substantially from last week’s reading $933.17MM, but buying also made a substantial increase from last week’s reading of $17.35MM.
It’s difficult to read into the selling data too much as insiders sell stock for a number of different reasons, however, the low level of buying continues to represent the very weak fundamental background that insiders see at their own corporations. Although the liquidity and margin driven rally has been impressive we still lack many of the organic fundamental components (revenue expansion for instance) that would give insiders the confidence to invest their own dollars in the long-term growth of their own companies.
Among the notable purchases were the Nelson Peltz purchase of Legg Mason and some interesting insider moves at DPL. Peltz, the billionaire activist, has increased his stake in LM to 4.75% of the company and could be foreshadowing a sale at some point despite LM’s repeated statements that they won’t succumb to such activism. DPL, on the other hand, saw some much smaller purchases, but it’s always interest when the CFO and CEO of a company invest their own dollars in their companies. These are hands down the two most knowledgeable executives at any firm. This one might be worth further investigation….
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.