It was a busy week for insider (senior management and execs trading shares in their companies) activity in the US, Insider Sentiment remained neutral with 1.4 Sells to every buy, we found far more interesting insider purchases than we did sales.
We upgraded 18 stocks this week where we see notable insider activity. This is a healthy figure but not unusual for this time of the year, just after quarterly results have been made public.
The 18 upgrades came from 6 sectors, primarily Industrials and Financials. Most of the upgrades have been following a similar pattern – stocks up strongly over past year but have corrected 20% from recent highs.
It is unusual to see insiders purchase stocks near highs, and when it happens, we have found a strong correlation for those highs not holding that title for very long.
With more selling than buying this past week but we spent far less time viewing the sales, most of it was “routine”, and in stocks that were close to their highs.
When insiders sell regularly, option related and likely as part of their compensation, all the while maintaining their overall holdings, we view this activity as neutral. That would describe most of what we are seeing.
While we have seen some large, out of the blue sales, we have not downgraded those stocks for various reasons. We expect the next few weeks of insider activity to remain heavy. Insiders seem content buying the dips and with the new lows list (519) not much smaller than the new high list (750), the market seems to be presenting plenty of buying the dips activity.
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