The annual 11-K reports for 2009 are beginning to show up in recent filings at the SEC. Given how successful last year was for most investors, it'll be interesting to see how 401(k) plans fared. Something that's got my attention of late is the net buying and selling of company stock and its predictor of future stock performance. For instance, if Talbot employees were net buyers of its company stock within the 401(k) in 2008, what was the likelihood its stock would increase in 2009? I'm not a mathematician but I do know its employees were net buyers of 329,370 shares in 2008 and its stock was up 273% in 2009. For fun, I thought I'd look at other retailers to see if there's a pattern worth noting or if it's mere coincidence. Depending on my findings, you might want to peruse a few of the 2009 11-K filings coming online. They may lead to untold riches or not.
IN PICTURES: 8 Tips For Starting Your Own Business

401(k) Net Stock Purchases and Total Returns
Company Net Shares Bought/Sold


Total Return


Total Return


Talbots (NYSE:TLB) 329,370 273% -75.4%
Limited Brands (NYSE:LTD) 206,271 97.6% -43.8%
Ann Taylor Stores (NYSE:ANN) 25,732 136.4% -77.4%
Men\'s Wearhouse (NYSE:MW) 174,168 57.6% -48.8%
Buckle (NYSE:BKE) 134,805 46.1% 11.8%
Urban Outfitters (Nasdaq:URBN) -249,818 133.6% -45.0%

Hard to Tell
Last year was a very strong year for retail. The SPDR S&P Retail ETF was up 77.3% in 2009, which makes it very difficult to determine whether any of the stock buying by retail employees in 2008 had anything remotely to do with the performance of those stocks in 2009. It just as easily could have been a case of a rising tide floating all boats. With the exception of Urban Outfitters, all of the retailers in the table above saw net buying of their shares in 2008. A better question might be why Urban Outfitter employees weren't gobbling up their shares in 2008 because with the exception of Buckle, they all saw significant price declines. My best guess is that Urban's 18.4% gain in 2007 (the only one with a positive return) was enough to make employees take some profits off the table. It'll be interesting to see how bullish Urban employees were in 2009. My guess is they were big net buyers. We'll know shortly.

The Difference Maker
While not perfect, if you look at the percentage increase in shares of each of the companies in 2008, it does correlate somewhat with their total returns. For instance, Talbot's had the second highest increase in shares at 66.9%, which resulted in the highest total return of the group at 273%. The largest share increase in 2008 belonged to Buckle and this translated into a total return of 46.1% the following year, which is more than respectable. Five of the six stocks are up year-to-date with Men's Wearhouse the exception. I'll bet you when the 11-K's for 2009 come out in the next few weeks that the likeliest 401(k) to be a net seller last year will be the Houston suit retailer.

The Bottom Line
I've written extensively about share repurchases and the fact that C-Suite's have very little understanding of the true intrinsic value of their company stock. However, I'm not so sure about their employees. More study is needed obviously but it appears very possible that the average person standing around the water cooler has a clearer picture of what's going on at work than the people at the top making the decisions. (For more stock analysis, take a look at Insiders Are Selling, Should You?)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Stock Analysis

    5 Cheap Dividend Stocks for a Bear Market

    Here are five stocks that pay safe dividends and should be at least somewhat resilient to a bear market.
  2. Investing

    How to Win More by Losing Less in Today’s Markets

    The further you fall, the harder it is to climb back up. It’s a universal truth that is painfully apparent in the investing world.
  3. Fundamental Analysis

    Use Options Data To Predict Stock Market Direction

    Options market trading data can provide important insights about the direction of stocks and the overall market. Here’s how to track it.
  4. Stock Analysis

    2 Oil Stocks to Buy Right Now (PSX,TSO)

    Can these two oil stocks buck the trend?
  5. Investing News

    What Alcoa’s (AA) Breakup Means for Investors

    Alcoa plans to split into two companies. Is this a bullish catalyst for investors?
  6. Stock Analysis

    Top 3 Stocks for the Coming Holiday Season

    If you want to buck the bear market trend by going long on consumer stocks, these three might be your best bets.
  7. Investing News

    Could a Rate Hike Send Stocks Higher?

    A rate hike would certainly alter the investment scene, but would it be for the better or worse?
  8. Investing News

    Corporate Bonds or Stocks: Which is Better Now?

    With market volatility high, you may think it is time to run for corporate bonds instead of stocks. Before you do take a deeper look into which is better.
  9. Mutual Funds & ETFs

    Using Short ETFs to Battle a Down Market

    Instead of selling your stocks to get gains, consider a short selling strategy, specifically one that uses short ETFs that help manage the risk.
  10. Investing Basics

    How to Diversify with International Stocks

    Diversifying with international stocks can benefit most portfolios, but beware of country risk.
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  4. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  5. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  6. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!