From E*Trade:
Insider Sentiment
Over the last five years there has not been an insider stock purchase at IBM.
There have, however, been many insider sales there, including a few within just the past month at $118-120/share, which is (slightly) above today's closing price.
Perhaps if IBM, which regularly buys in 4% or more of its outstanding shares each year while paying continuing shareholders only a modest dividend, would instead stop with the share buybacks and pay a large dividend, which might be north of 6%, its insiders would buy the stock instead of selling.
Why should the public buy the stock when no insiders buy? Why should not shareholders sell when insiders often sell?
Other stocks without insider buys in the last 5 years include stocks I own or have owned and that have strong charts with recent highs in stock prices, such as Teva and Ross Stores.
Bristol-Myers, with a long-depressed share price but a high dividend rate, has a decent insider buy complement; and Eli Lilly, with similar share and dividend characteristics, reports no insider activity at all in the past year save for granting modest amounts of stock options to directors at around the current stock price.
On the other hand . . .
Much has been made by some observers of the very high sell-buy ratio recently amongst insiders. This is not a "good thing" but also may be too soon in the cycle to be very worrisome. After a prolonged bull market, this ratio may be much more of a warning sign, however. Let us say that 2 years ago, your company's stock was $50, then within the past year it fell to $20, and now it has rebounded to $35. When it was $50, you may have been bullish and made personal plans as if it were going flat to higher. Now you may sell simply because you have been hit in the head with reality, because you need the money, because you're getting more options anyway, etc. My inexpert reading of history is consistent with this idea, which is that coming out of a recession, insider selling means less than after a prolonged bull market. Not all insiders are necessarily zillionaires, after all.
The above comments notwithstanding, I believe that IBM has been such a vocal bull on its own business prospects, and has gone to such great lengths to beat its own numbers, that it is upsetting to see NO insider buys over an entire 5-year period, including when the stock was far below today's price. Based on stock price:free cash flow, IBM appears to be a screaming buy in view of current high-grade fixed income yields; why is the stock not higher, and why are insiders not buy-buy-buying?
Copyright (C) Long Lake LLC 2009
Showing posts with label insider buying. Show all posts
Showing posts with label insider buying. Show all posts
Tuesday, September 8, 2009
Thursday, May 7, 2009
Many Roads Lead to Gold
Yesterday's post critiquing Cisco's earnings may have resonated on the Street. CSCO opened up but then turned tail the rest of the day. Unlike Big Finance, at least CSCO makes products that help people and businesses, that work as advertised, and that have allowed the company to amass a large cash position without selling stock. Unfortunately, CSCO is big, is losing market share, promotes its stock too much, etc., so EBR is not in love with it as an investment, either; but at least it is not a fraud.
Re the whole bubble, there is a nice summary of free-market, Austrian economics thinking re where we have been and where the current President wants to take us. It's not groundbreaking research, but it's worth a read as a review of a coherent position to which EBR is sympathetic.
See "Beware of Obamanomics" (which is not partisan, despite its title; it skewers many).
TrimTabs continues to report almost nil insider buying. If stocks were cheap at Dow 8400, there should be lots of insider buying. EBR likes this trend not at all.
Courtesy of Zero Hedge, the Fed has released statistical report G.19, which demonstrates steady declines this year in the quantity of consumer credit. People simply don't want/can't afford debt. In this regard the people are wiser than their overlords.
Also in Zero Hedge, "The Reverse Engineering of Greenspan Continues" demonstrates some extraordinary overpricing of mortgage-backed debt vs. Treasuries, as well as providing an interesting long term look at that relationship.
The combination of heavily bearish sentiment on Treasuries, falling consumer credit, overcapacity in goods and services everywhere the eye can see, the Big Lie that Big Finance is healthy (thank you, PPIP!), and the undervaluation of Treasuries vs. mortgage-backed securities would appear to make long Treasuries an interesting speculation. Anywhere from 10-30 year yields are interesting, as they are at or within support ranging from the Bear, Stearns fiasco (the 10 year) to the prior cycle (the 30 year).
Nonetheless, despite an uninspiring chart, of Treasuries, the S&P 500, and gold, guess which asset that Econblog Review continually speaks well of is up on the year. Only gold, which is also outperforming cash. Gold was up in price 8 years in a row before 2009. Will it end with a blowoff upside peak, a la 1979 or the NASDAQ in 1999? Treasuries may be a good trade, but gold can be forever.
Copyright (C) Long Lake LLC 2009
Re the whole bubble, there is a nice summary of free-market, Austrian economics thinking re where we have been and where the current President wants to take us. It's not groundbreaking research, but it's worth a read as a review of a coherent position to which EBR is sympathetic.
See "Beware of Obamanomics" (which is not partisan, despite its title; it skewers many).
TrimTabs continues to report almost nil insider buying. If stocks were cheap at Dow 8400, there should be lots of insider buying. EBR likes this trend not at all.
Courtesy of Zero Hedge, the Fed has released statistical report G.19, which demonstrates steady declines this year in the quantity of consumer credit. People simply don't want/can't afford debt. In this regard the people are wiser than their overlords.
Also in Zero Hedge, "The Reverse Engineering of Greenspan Continues" demonstrates some extraordinary overpricing of mortgage-backed debt vs. Treasuries, as well as providing an interesting long term look at that relationship.
The combination of heavily bearish sentiment on Treasuries, falling consumer credit, overcapacity in goods and services everywhere the eye can see, the Big Lie that Big Finance is healthy (thank you, PPIP!), and the undervaluation of Treasuries vs. mortgage-backed securities would appear to make long Treasuries an interesting speculation. Anywhere from 10-30 year yields are interesting, as they are at or within support ranging from the Bear, Stearns fiasco (the 10 year) to the prior cycle (the 30 year).
Nonetheless, despite an uninspiring chart, of Treasuries, the S&P 500, and gold, guess which asset that Econblog Review continually speaks well of is up on the year. Only gold, which is also outperforming cash. Gold was up in price 8 years in a row before 2009. Will it end with a blowoff upside peak, a la 1979 or the NASDAQ in 1999? Treasuries may be a good trade, but gold can be forever.
Copyright (C) Long Lake LLC 2009
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