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Insider selling on the rise. Bear Signal?

(Last Updated On: November 10, 2011)

Talk about mixed signals. Warren Buffett buys $20 billion of stock in October and insiders sell at a 19 to 1 rate. Who would you follow?

 

Insider selling on the rise. Bear Signal?

Insider selling accelerated in October to the most aggressive pace since February, even as the S&P 500 rallied 11% to log its best monthly gain in almost 20 years.

 

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You don’t often get Warren Buffett buying when others are. The MS global risk demand index has risen from -3 to +2 standard deviations recently. Also it is surprising that sentiment has remained as positive as it has, given all the negative press in October. World indices have recovered their poise and look quite happy at these levels without showing too much strain.With so much cash still sitting around looking for a decent home, a run up for the next 8 weeks is on the cards. Should the market continues to trend higher, what fund manager will want to be left behind come their year end assessment?

 

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I like this post, and although it might be interpreted as two opposite scenarios taking place, they’re probably the same. Spare with me these comments;

From what I understand, Buffett’s 20B investments where on a 3 month period, not just October. Also, it inlcudes Lubrizol and Bank of America which can be considered as bull investments and represent over 50% of the total 20B.

Further, analysis should be made on the majority of these insider transactions to see if they where done through the 10b5-1 plan and thus can be considered a “regular practice” given the fact it’s almost accounting year end and if these shares sold actually represent high percentages of the insider’s ownership or not. It might be that they’re just looking to have some spare cash now that their company’s stocks have developed last month into their highest in years. So I could discern this doesn’t necessarily represent a bear trend, and hence encourage a bull approach to individual investors.

I like the  comment above about what fund manager would want to be left behind. It actually provides a completely different perspective to what the article is intended to present.

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Well, we are certainly living some very interesting times. Incredible volatility is creating outstanding buying opportunities of solid dividend paying companies.

Insiders are pretty much taking profits off the table, as the worldwide indices lived one of the best months in recent history (October).

I agree with Fidel that Buffett’s move was clearly a bull move and that’s the way should be interpreted.

 

 

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