Insiders haven’t been buying up their company stock at this pace since the market bottom in 2009.
While high volumes of insider activity falsely heralded a market bottom in November 2008, Ben Silverman at InsiderScore.com notes that no significant upside market correction lacked insider purchases over the past three decades. The latest buying was across sectors and may have peaked mid-week, though buying at financial services companies picked up while technology and energy insiders seemed to sit out some of the party.
The volume of buying this week was about 75% of that in March 2009, but it’s earnings season and many companies forbid trading timed too close to a conference call. Remaining buyers, Silverman says,
“are buying because they believe their companies stocks are undervalued. Theyre not buying because they think the Federal Reserve or European Central Bank are suddenly going to come up with mind-blowing ideas or that Standard & Poors is going to retract its U.S. debt downgrade …They understand their businesses better than any analyst or other investor.”