Insider Observations

Past week

Speaking about the past week, as expected, the insider trading volume was light. Insider selling dropped at a much faster rate than buying. One of the reasons could be the declining stock prices over the past few weeks. We upgraded 5 stocks, all of them up meaningfully vs. their March lows, but all down from recent highs. All of the upgrades were ranked +N as the buying was not aggressive.

Past month

If we look back on September we view insider sentiment as neutral with about 4 sells to 3 buys (30-day Sell/Buy Ratio 1.35).

Through Sept. 24th, we have upgraded 27 stocks during the month, downgraded 11. Financials and Industrials continue to be most favored by insiders, with mixed sentiment in Consumer Discretionary.

What’s next

Over the next few weeks, the insider activity will be limited to those companies that do not have a September quarter-end, or insiders who are trading using 10b5-1 plans.

We will be discussing potential changes to the rules regarding these 10b5-1 plans as the SEC reviews and recommends some changes, spurred by political pressure. When the rules surrounding 10b5-1 plans were first implemented (October 2000), we were concerned that it would make the analysis of selling more difficult. In retrospect, that was not the case. We will be closely monitoring these potential new changes.

This is a short summary of our Highlights report for the US market which we send to our clients every Monday. If you are interested in it, please, email us to sales_admin@smartinsider.com or fill in the Contact form.

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