Insiders getting out in October

So far this month, insider selling is averaging $178 million worth of transactions per day, according to TrimTabs.

By TheStreet Staff Oct 25, 2011 11:18AM

 By Michael Baron, TheStreet



October has seen plenty of insiders selling and very few buying, according to data from research firm TrimTabs, which tracks asset flows and market liquidity.


So far this month, insider selling is averaging $178 million worth of transactions per day, the firm said. That's more than double September's daily average of $76 million. Meanwhile, insider buying has been almost nonexistent, TrimTabs notes, coming in at just $8 million per day, less than a third of the year-to-date average of $30 million.


"As the S&P 500 has climbed 12.6% from its closing low on October 3, insider activity has turned extremely bearish," the firm said.


Those numbers result in an insider sell-buy ratio of 21.5 for October, up significantly from ratios of 2.4 in August and 3.1 in September, and the highest level seen since February.

TrimTabs said the sectors seeing the most insider sales this month are consumer discretionary at $1 billion, health care at $451 million and information technology at $204 million. Month to date, selling is still below $3 billion, but the activity has already exceeded September's total. From a dollar value standpoint, insider selling for 2011 peaked in March, when it exceeded $13 billion.


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Among the companies seeing insider sales this month have been Apple (AAPL), Ciena (CIEN), Crocs (CROX), CBS (CBS), Ann (ANN), Leapfrog Enterprises (LF), and SanDisk (SNDK), to name just a few.


In a Form 4 filed on Oct. 20, Jeffrey Williams, a senior vice president at Apple, details the sale of 10,000 shares received on Oct. 18 after the vesting of restricted stock units. Williams sold 4,668 shares on Oct. 18 at the stock's closing price of $422.24, then sold the remainder on Oct. 19 at prices ranging from $399.55 to $407.86. Williams still owned 213 Apple shares after the transactions, according to the filing.


On Oct. 17, Stephen Alexander, a senior vice president and chief technology officer at Ciena, sold 3,500 shares at $12.22 each. Alexander still owns more than 225,000 Ciena shares, according to the filing.


A well-timed sale was executed by Daniel Hart, the executive vice president at Crocs, as part of regular options vesting and stock sale activity. Hart exercised an option to acquire 4,167 Crocs shares at $3.99 each on Oct. 17 and sold the same amount of stock the same day for $26.93 per share.


After the market close that day, Crocs issued a surprise warning for its third-quarter results, sending the stock down more than $10 on Oct. 18 to close at $16.15. Hart's sale, though, was in keeping with past practices, as he has been executing similar monthly transactions of varying sizes for more than a year. Hart also still beneficially owns more than 100,000 Crocs shares, so he's taken a hit as well.


Moonves, the president and CEO of CBS Corp., has also engaged in regular options and stock sale activity this month. Moonves acquired 300,000 shares of CBS Class B common shares at $13.09 each on Oct. 17 through the exercise of employee stock options and then sold the same amount for $22.96 each. He still has significant direct and indirect holdings in CBS and was selling stock under a Rule 10b5-1 trading plan adopted in March and then amended in August.


Katherine Lawther, the president and CEO of upscale women's clothing retailer Ann Inc., reported the divestment of 15,000 shares on Oct. 20, selling 13,200 shares at $25.39 each and 1,800 shares at $26.09 each. The sales were made as part of a Rule 10b5-1 trading plan adopted by Lawther, who still owns more than 385,000 Ann shares after the transactions.


LeapFrog Enterprises, meanwhile, has seen more of the same this month with continued regular selling by an entity controlled by Oracle (ORCL) CEO Larry Ellison. On Oct. 21, Mollusk Holdings, which controls more than 10% of Leapfrog's outstanding stock, announced the sale of 30,000 shares at $3.52 each. The sale is one of eight same-size transactions this month alone, and similar transactions have been occurring all year as part of a regular trading plan filed with the SEC. Mollusk Holdings still owns nearly 1.5 million Leapfrog shares, according to the filing.

A big sale earlier in the month came from SanDisk CEO and president Sanjay Mehrotra. On Oct. 10, Mehrotra disclosed the sale of 20,000 shares after the exercise of stock options. Mehrotra bought the shares for $34.59 each and sold 19,900 shares at $44.88 each and 100 shares at $45 each. Mehrotra has indirect ownership of 35,392 SanDisk shares through a family trust.

Oct 25, 2011 11:59AM
This doesn't sound like a vote of confidence to me.
Oct 25, 2011 2:07PM

Let's see if they censor me this time.


The market is way up again, it's time to bailout. Put it to the fat cats, take your money and run like hell. Buy back in after the crash, you know it coming. They've been doing it to you, now it's your turn.


As part of the 99% I've had to pay for all the bailouts. The movement is tired of not being represented by anyone in Washington and having to pay for everything. Now it's our turn to put it to them.

Oct 25, 2011 1:09PM
So, is it a pump and dump by Hedge Funds, Sovereign Wealth funds and Banksters who have the juice to manipulate the market or just "irrational exuberance" responsible for the recent rally?  It apparently isn't insiders. The world wonders.
Oct 25, 2011 1:12PM

Sooooooo,if their trading, and their "insiders" wouldn't that make it Insider Trading???


And all this time I thought insider trading was illegal.

Oct 25, 2011 1:18PM
Nope.  Insiders trading on inside information is illegal.  That's not what they're talking about here.
Oct 25, 2011 1:40PM
What they are talking about is nonsense because when they say that the "insiders" were more or less buying(or maybe just holding),the market looked like it was dropping like a brick.Now they say the insiders are selling and the market is going up. So I think anything that is said in  these articles are to basically confuse people. I'm confused but I will still buy stocks that are good values.
Oct 25, 2011 12:52PM

This was the same deal in August and September. About how market flows were out and not in (at record levels) and therefor the market was going down. Exact opposite happened.

Oct 25, 2011 2:50PM

the rats are jumping from the ship! 


So far this month, insider selling is averaging $178 million worth of transactions per day, the firm said. That's more than double September's daily average of $76 million. Meanwhile, insider buying has been almost nonexistent, TrimTabs notes, coming in at just $8 million per day, less than a third of the year-to-date average of $30 million.
Oct 25, 2011 3:32PM

I am reading Galbraith's The Great Crash and the stock market is acting the same way as it did in 1929.  Insiders were bailing out during September and October of 1929 while the weakness in the real economy had shown up almost a year before the market crashed.


Nothing like history repeating again, instead of Trusts we have Mutual Funds, the Fed has kept interest rates low for borrowing and speculation, housing is in the tank and so is farming. 


I wonder if anyone is seeing the same thing?  Could it all happen all over again?


PS.  The names of the individuals in 1929 are different today but some of the big firms are still the same.

Oct 25, 2011 2:35PM
Makes total sense....sell high and buy low......but if you listen to Anthony the bull (no pun intended) is just getting started so start buying!
Oct 25, 2011 5:05PM
Disappointed Those big up and down was an opportunity to ride up and down for the daily traders and those big spike upwards was an opportunity for those who wanted to bail out? It figures.
Oct 25, 2011 3:25PM
Hay, maybe its time the 99% can beat them at their own game. I'm in.Tongue out
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