Time to get out of US equities?

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Insiders sell like there's no tomorrow

Corporate officers and directors were buying stock when the market hit bottom. What does it say that they're selling now?


By Colin Barr, senior writer
Last Updated: September 11, 2009: 7:27 AM ET

http://i2.cdn.turner.com/money/2009/..._sales2_03.gif
http://i2.cdn.turner.com/money/2009/...es/spx.mkw.gifStocks have rallied -- but corporate officers and directors are now selling after buying the dip.
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NEW YORK (Fortune) -- Can hundreds of stock-selling insiders be wrong?
The stock market has mounted an historic rally since it hit a low in March. The S&P 500 is up 55%, as U.S. job losses have slowed and credit markets have stabilized.

But against that improving backdrop, one indicator has turned distinctly bearish: Corporate officers and directors have been selling shares at a pace last seen just before the onset of the subprime malaise two years ago.
While a wave of insider selling doesn't necessarily foretell a stock market downturn, it suggests that those with the first read on business trends don't believe current stock prices are justified by economic fundamentals.
"It's not a very complicated story," said Charles Biderman, who runs market research firm Trim Tabs. "Insiders know better than you and me. If prices are too high, they sell."

Biderman, who says there were $31 worth of insider stock sales in August for every $1 of insider buys, isn't the only one who has taken note. Ben Silverman, director of research at the InsiderScore.com web site that tracks trading action, said insiders are selling at their most aggressive clip since the summer of 2007.

Silverman said the "orgy of selling" is noteworthy because corporate insiders were aggressive buyers of the market's spring dip. The S&P 500 dropped as low as 666 in early March before the recent rally took it back above 1,000.
"That was a great call," Silverman said. "They were buying when prices were low, so it makes sense to look at what they're doing now that prices are higher."

Oldest Swiss Bank Tells Clients to Sell U.S. Assets or Leave

By Warren Giles

Sept. 2 (Bloomberg) -- Wegelin & Co., Switzerland’s oldest bank, is telling wealthy clients to sell their U.S. assets, or switch banks, because of concerns new rules will saddle investors with tax obligations in the world’s biggest economy.

U.S. proposals to extend reporting requirements for banks whose clients buy American stocks and bonds coupled with estate tax liabilities that may be inherited by the heirs of people who have such holdings prompted the advice from the St. Gallen, Switzerland-based bank, said Managing Partner Konrad Hummler.

“We came to the conclusion that it’s a threat to our clients,” Hummler, who is also president of the Swiss Private Bankers Association, said in an interview yesterday during a conference in Zurich. “It’s also a threat to us as a bank because as a custodian we are an executor to the estate. We find this aspect discomforting, so we recommend selling all American securities whatsoever.”