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Stocks With Large Insider Selling, Buying - 9794 views
WINDERMERE, Fla. (Stockpickr) -- For the first week of 2011, insider selling at S&P 500 companies outpaced insider buying by a ratio 114 to 1, after closing out 2010 in the previous week with ratio of selling to buying of 19 to 1.
According to a weekly report out of Bloomberg, the total amount of insider selling for the period of Jan. 3 to Jan. 7 was $289.4 million, and the total amount of insider buying was $2.5 million. I don’t want to sound like a broken record, but once again, key corporate executives at the top companies in the world are selling far more stock than they’re buying. This is a trend that has been in place for months and hasn’t shown one sign of changing course.
As much as I want to sound the alarm about the persistent insider selling at S&P 500 companies, it doesn’t make much sense to at this time since the market continues to power higher. The market, for now, doesn’t care that insiders are far more interested in selling their own stock than buying it.
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The trend in the equity markets is still clearly up. Not even this entire insider selling spree has changed that to this point. It’s possible that the market could just continue to trend higher for a very long time before anyone cares about the large amounts of insider selling we have been experiencing since early last year. Corporate insiders are most likely just taking advantage of a healthy uptrending market to lock in some profits.
One of the few companies at which insiders were actually buying stock is producer of titanium melted and mill products Titanium Metals (TIE). The chairman of the board, Harold C. Simmons, purchased 147,800 shares, or $2.5 million worth of stock, at an average share price of $16.80. Shares of Titanium have now started to move back above the 50-day moving average of $17.68 and the 200-day moving average o$18.41, with the stock currently trading around $19.12. All I can say about the continued buying by Simmons is that it is very bullish.
Since November of last year, Simmons has bought well over $40 million worth of stock in TIE. Nobody would continue to buy that much stock if he didn’t think their shares were undervalued and had a lot of upside. Titanium Metals is considered a solid play on rare earth metals since the stock makes up around 5.5% of the Market Vectors Rare Earth Metals ETF (REMX). That could be one of the big reasons that Simmons is buying so much stock. He might believe that the bull market in rare earth metals is just in its infancy.
The other three S&P 500 stocks that had some minor insider buying were Lexmark International (LEX), PNC Financial Services (PNC) and Best Buy (BBY). Unfortunately, none of these companies had insider buying for the reporting period that ended on Jan. 7 that totaled over $30,000 worth of stock. That hardly makes these stocks worth mentioning, but I would advise readers to keep these names on their watch list to see if they are hit with more buying in the near future. That would confirm the possibility that these stocks could be trading at a value that’s attractive to the people who understand the most about these companies.
Here's a look at the top 20 S&P 500 stocks with the largest amount of insider selling in the period of Jan. 3 to Jan. 7.
The top five stocks on the insider selling list for this reporting period were Google (GOOG) with over 68 million, McKesson (MCK) at around $28 million, Qualcomm (QCOM) close to $28 million, Ford Motor (F) at $11 million and Hewlett-Packard (HPQ) at $10 million. The amount of selling in these five leading stocks totaled around $144 million worth. The dominating theme among the top five is that three of these companies (Google, Qualcomm and Hewlett-Packard) are big players in the technology sector.
Qualcomm was hit with some planned selling from its chairman and CEO, Paul Jacobs, and from its CFO, William Keitel. Both of these key insiders at Qualcomm made up a bulk of the selling, which saw 544,338 shares sold for a total amount of $27.96 million at an average share price of $51.37. Again, these were planned sales that were tied to the exercising of options. Despite this large selling by these key Qualcomm insiders, the stock still looks OK from a technical standpoint. Market players should keep an eye on Qualcomm for a breakout play if the stock can manage to take out some previous overhead resistance at around $53 a share.
Qualcomm shows up in the portfolios of George Soros, who increased his position in the stock by 190.9% in the most recent period, and Bill Miller's Legg Mason, at 2.6% of the total portfolio. With a B buy rating from TheStreet Ratings, Qualcomm is one of the Top-Rated Communications Equipment Stocks.
Almost all of the selling in Google was done by Sergey Brin, the president of technology, and John Doerr, a director. From a technical standpoint, Google looks good, with the stock trading above both its 50-day and 200-day moving averages. Also, the stock just broke above some stiff overhead resistance at around $630 a share. That $630 level had marked an area where the stock failed at twice since early 2010. But now with the stock changing hands at around $636 a share, we could have another bullish trend setting up to take the stock much higher.
George Soros also owns Google and increased his position in the stock by 1,541.6% in the most recent quarter, as does Julian Robertson at Tiger Management, at 6.7% of his total portfolio. With a B buy rating from TheStreet Ratings, Google is one of the Top-Rated Internet Software Services Stocks.
Google, Qualcomm and Hewlett-Packard weren’t the only S&P 500 tech stocks hit with notable insider selling. In fact, half of the top 20 stocks on the insider selling list were heavily tied to the technology sector. Some of the other names that saw insiders dump a fair amount of stock were Broadcom (BRCM) at $7 million, JDS Uniphase (JDSU) at around $6.8 million and Microsoft (MSFT) at $4.2 million.
This selling doesn’t necessarily indicate that the technology sector is overvalued. Once again, we probably just have some smart insiders who’re using the strength in the Nasdaq, which is up close to 20% since last year, to sell their stock and lock in some profits.
One stock that isn’t tech-related that was hit with big selling by a key company insider was McKesson, which provides medicines, pharmaceutical supplies, information and care management products and services across the healthcare industry. Corporate insiders at McKesson sold around 398,000 shares, or $28.6 worth of stock, at an average share price of $71.89. Chairman, President and CEO John H. Hammergren made up a bulk of that selling after he exercised options that equaled around 300,000 shares during the most recent reporting period.
From a technical standpoint, shares of McKesson have recently broken out above some previous overhead resistance at around $71 a share. For now, this means that market doesn’t have any problems with Hammergren locking in some profits. It’s also worth noting that Hammergren sold large amounts of stock back in June, July and August of 2010. This shows that he’s been a persistent seller for some time. Despite his selling regularity, the stock is still in an uptrend and actually looks poised to challenge its all-time highs above $90 a share if this bullish action continues.
McKesson shows up as 3.8% of Edward Owens' portfolio at Vanguard Health Care Fund, and TheStreet Ratings rates it a B buy.
One more stock where a key insider sold a ton of stock was transportation company CSX (CSX), whose rail and intermodal businesses provide rail-based transportation services including traditional rail service and the transport of intermodal containers and trailers. CSX Chairman, President and CEO Michael Ward made up a bulk of the selling that saw insiders dump 125,700 shares, or $8.3 million worth of stock, at an average price of $65.45. Ward exercised options during the most recent reporting period that totaled around 100,000 shares worth about $6.5 million. Following this move by Ward, his total holdings of CSX stock decreased by around 17% from 392,000 shares to around 324,000 shares. That’s a sizable decrease and could be an early warning sign that Ward doesn’t’ see much value in his stock at current prices.
However, from a technical standpoint, shares of CSX have recently broken above some past overhead resistance at around $66 a share and are trading in all-time high territory. It’s hard to argue against any stock that’s trading s close to its all time high ($69.58), even one where the CEO is dumping a lot of stock.
The Bill and Melinda Gates Foundation is one of the has 0.6% portfolio exposure to CSX, and Highbridge Capital management increased its position in the stock by 311.6% in the most recent quarter. With a B+ buy rating, CSX is one of TheStreet Ratings' top-rated railroad stocks
To see more stocks with heavy insider selling, check out the Top 20 S&P Stocks With Big Insider Selling portfolio on Stockpickr.
-- Written by Roberto Pedone in Winderemere, Fla.
At the time of publication, author had no positions in stocks mentioned.
Roberto Pedone, based out of Windermere, Fla., is an independent trader who focuses on stocks, options, futures, commodities and currencies. He is also an outside contributor to Beconequity.com and maintains the website Maddmoney.net, which he sold to Blue Wave Advisors in 2008. Roberto studied International Business at The Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany.