While the recent pullback in equities has most retail investors running for the exits, dumping their mutual Funds and ETFs in record quantities, insiders appear unfazed.
Statistics show that U.S.-focused mutual funds lost $13.4 billion in redemptions at the end of May, while international funds saw another $3.9 billion exit. Those were the largest such redemptions since March 11, 2009, according to the Investment Company Institute. And not surprisingly, that was also the week that the market bottomed and marched higher for roughly the next year.
As if they were reading those same statistics, stock insiders took advantage of the latest pullback to further shore up their stock holdings. According to Insider Insight, the end of May saw the ratio of open market insider purchases to open market insider sells jump above one, something it last did at the beginning of April, 2009, when the bull market was just beginning to gain traction.
The following three stocks saw some exceptional insider buying last week. Confidence in their future appears to be growing.
Insider Buying Outsiders
Enrique Salem is the president and CEO of Symantec Corp. (Nasdaq:SYMC), a global provider of data storage, management and security solutions. Last week, he purchased 20,000 of the company's shares for just under $280,000.
Symantec stock trades with a P/E of just over 10 and has a market cap in excess of $11 billion. Year to date, the stock has fallen more than 20%, compared to just over 1% for the Nasdaq, as represented by the PowerShares QQQ Trust ETF (Nasdaq:QQQQ).
Symantec has just recently formalized a deal with VeriSign, Inc. (Nasdaq:VRSN), to purchase that company's internet payment security technology for $1.28 billion.
Chiquita Brands International, Inc. (NYSE:CQB) is a marketer/distributor of bananas and other produce. Fernando Aguirre, the company's chairman, president and CEO, just purchased more than $500,000 worth of the stock last week.
The Bottom Line
Active insider buying is a sign of confidence in a company's stock. And when it's occurring on a broad basis, it paints a potentially bullish picture of the market as a whole. (Learn more about the insider trading, see: Can Insiders Help You Make Better Trades?)
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!