U.S. corporate insiders selling shares at fastest pace since financial crisis a decade ago

CBC News
The share price for Facebook is displayed at the Nasdaq exchange in New York CBC News | James Alexander Michie

The share price for Facebook is displayed at the Nasdaq exchange in New York. Insiders at the company have been selling shares of late, which some see as a possible harbinger of bad things. (Scott Eells/Bloomberg)

Investors look for signs of whether experts put more or less money in their own companies.

Initiates are people who work as directors or senior business officials, whose compensation often includes things such as stock options and common actions, so they have a financial interest acquired in the companies for which they perform key functions.

Because they are fully invested and have access to data on the performance of their companies before the general public, some investors believe that valuable information can be obtained by observing whether insiders are investing more or less of their own money in them.

In this way, one could say that if this theory is true, the message is clear, sell.

Significant increase in sales

It is important to bring up that, according to the research firm TrimTabs, in August, experts from US companies sold, on average, about $ 600 million in shares in their own companies per day.

Now, five times this year they have already sold more than $ 10 billion in shares in a single month. The last time markets saw so many sales so many times in a year was in 2006 and then again in 2007, just before the stock market exploded at the end of 2008.

However, it has been said that there is nothing necessarily alarming about the fact that insiders will charge.

In fact, according to TrimTabs analyst Winston Chua, “not a very positive sign”, I also add, “It can be a bad sign of lack of corporate confidence”.

Experts in technology companies, including the so-called FAANG shares, an acronym for Facebook, Amazon, Apple, Netflix, and Google, have been some of the best sellers. That could be a sign that they think the impressive period of years in the stock prices of those companies is over.

Read more.

Source: Pete Evans | CBC News

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