Andrew Postelnicu Reports on Insider Sales

Daniel Gross makes the catch:

Daniel Gross : Andrew Postelnicu reports in the Financial Times that corporate insiders are dumping shares.

Selling of US stocks by company officers, directors and other insiders last month reached the highest level since just before the bursting of the dotcom bubble, data showed. Thomson Financial said insider selling reached a total of $6.1bn in February, the highest since the $9.1bn record set in February 2000. High levels of insider activity are viewed as indicators of turning points in the market, and many investors incorporate the data into their market analysis. Mark LoPresti, analyst at Thomson, said the data fitted within historical patterns of spikes in insider activity from January to March. He said a further increase in March could be more meaningful because insider activity had generally decreased during this month.

The biggest Wall Street companies saw the highest levels of insider selling, Thomson said, with sellers outnumbering buyers by four to one. George Muzea, who runs an investment research firm focused on insider activity, concurred with that finding. "The lack of insider interest in large caps does not bode well for some of the larger indexes, such as the S&P 500," Mr Muzea said. "In our opinion, from an insider perspective, it makes sense to consider . . . S&P 500 for short [calls]." Mr Muzea added that investor sentiment still indicated more bulls than bears in themarket. The reverse had not occurred since October 2002, he said.