Spooked by the recent decline in the stock market? Smart money insiders saw it coming.
“Insiders at Nasdaq 100 index companies are harvesting a once-in-a-millennium bonanza,” according to Vincent Deluard, a macro strategist for StoneX, quoted in a Financial Times article.
Market watchers had been pointing to a number of stretched metrics such as price/earnings ratios, stock option activity, and technology stocks’ distance from their 200-day moving averages as evidence that the Nasdaq was due for a pullback, if not a correction of 10% or more.
A tell tale sign the smart money got ahead of the downturn and sold to the so-called dumb retail investor is the selling of shares by executives of publicly-listed companies. That figure hit a five-year high in August.
Here are a few of the hi-lights from the Financial Times article by Richard Henderson:
- US executives sold $6.7 billion of stock in their own companies last month. They chased in on a record-breaking market rally with the biggest burst of selling in five years.
- The dollar value of sales by 1,042 chief executives, chief financial officers and company directors in August topped any month since November 2015, according to figures compiled for the Financial Times by Smart Insider, a data provider.
- The data are based on filings with the US securities regulator and exclude sales made for tax purposes through executive pay plans.
- Steven Rales and his brother Mitchell, founders of US industrial conglomerate Danaher, were the biggest sellers in August. They offloaded nearly $1 billion worth of stock in technology specialist Fortive Group, which was spun out of Danaher in 2016.
- Steven Rales pocketed $606 million while Mitchell took home $363 million.
- Separate data from StoneX, a brokerage, showed insider sales in the second quarter for companies in the tech-heavy Nasdaq 100 stock index reached $10.4 billion. That’s up 171 per cent from the same quarter last year.