[CANSLIM] Insider Trades

From: "Katherine Malm" <kmalm@earthlink.net>
Subject: [CANSLIM] Insider Trades
Date: Thu, 29 Aug 2002 07:52:40 -0500
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Hi All,

This excerpt is from John Mendelson's Weekly report (Schwab Capital =
Markets). I thought it interesting from a CANSLIM point of view, as =
insider trading patterns are one of the secondary indicators under =
buying/selling strategies. As insiders will be required to report more =
quickly, I wonder if this will create more "noise" or provide more =
information when looking at the charts. Thought I'd also include a link =
for my favorite insider tracking site: =
http://insider.thomsonfn.com/tfn/insider.asp?linkcode=3D7rdcg6divt9fsuu5a=
wkj.

- --Katherine
=3D=3D=3D=3D=3D=3D=3D=3DMendelson Excerpt (highlighting is =
mine)=3D=3D=3D=3D=3D=3D=3D=3D=3D
Some recent market statistics look encouraging. Corporate executives =
appear to be more optimistic

on their own companies as the insider trading data for the week ended =
August 16, 2002 showed a parity of

sales to purchases (a ratio of 1.01), as opposed to the 4 to 1 ratio of =
sales to purchases two months ago,

according to Vickers Weekly Insider Report. Ratios close to 1 to 1 =
between insider sales and purchases have

been very unusual over the past thirty years with these events producing =
a gain of about 30% in the popular

market averages over the next year. An classic example of the insider =
trading ratio dropping to around parity

was the 1.18 reading for the week ended August 20, 1982, just after a =
major bottom in the market. The recent

August 16 ratio was three weeks after the July 24, 2002 low. Since most =
corporate insiders acquire their

stock in grants or by exercising options rather than by outright =
purchases and because executives buy homes,

educate children etc., selling normally outweighs buying. For years, I =
have believed a ratio of less than 2 to 1

is a bullish sign....as noted above, the latest reading is 1.01 to 1. =
This indicator may become even more=20

useful, as next month companies will be required to report insider =
trades within two days of execution rather

than the current regulation of reporting by the 10th of the month.


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<HTML><HEAD>
<META http-equiv=3DContent-Type content=3D"text/html; =
charset=3Diso-8859-1">
<META content=3D"MSHTML 6.00.2716.2200" name=3DGENERATOR>
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<BODY bgColor=3D#ffffff>
<DIV>Hi All,</DIV>
<DIV>&nbsp;</DIV>
<DIV>This excerpt is from John Mendelson's Weekly report (Schwab Capital =

Markets). I thought it interesting from a CANSLIM point of view, as =
insider=20
trading patterns&nbsp;are one of the secondary indicators under =
buying/selling=20
strategies. As insiders will be required to report more quickly, I =
wonder if=20
this will create more "noise" or provide more information when looking =
at the=20
charts. Thought I'd also include a link for my favorite insider tracking =
site:=20
<A=20
href=3D"http://insider.thomsonfn.com/tfn/insider.asp?linkcode=3D7rdcg6div=
t9fsuu5awkj">http://insider.thomsonfn.com/tfn/insider.asp?linkcode=3D7rdc=
g6divt9fsuu5awkj</A>.</DIV>
<DIV>&nbsp;</DIV>
<DIV>--Katherine</DIV>
<DIV>=3D=3D=3D=3D=3D=3D=3D=3DMendelson Excerpt (highlighting is =
mine)=3D=3D=3D=3D=3D=3D=3D=3D=3D</DIV>
<DIV>
<P>Some recent market statistics look encouraging. Corporate executives =
appear=20
to be more optimistic</P>
<P>on their own companies as the insider trading data for the week ended =
August=20
16, 2002 showed a parity of</P>
<P>sales to purchases (a ratio of 1.01), as opposed to the 4 to 1 ratio =
of sales=20
to purchases two months ago,</P>
<P>according to Vickers Weekly Insider Report. Ratios close to 1 to 1 =
between=20
insider sales and purchases have</P>
<P>been very unusual over the past thirty years with these events =
producing a=20
gain of about 30% in the popular</P>
<P>market averages over the next year. An classic example of the insider =
trading=20
ratio dropping to around parity</P>
<P>was the 1.18 reading for the week ended August 20, 1982, just after a =
major=20
bottom in the market. The recent</P>
<P>August 16 ratio was three weeks after the July 24, 2002 low. Since =
most=20
corporate insiders acquire their</P>
<P>stock in grants or by exercising options rather than by outright =
purchases=20
and because executives buy homes,</P>
<P>educate children etc., selling normally outweighs buying. For years, =
I have=20
believed a ratio of less than 2 to 1</P>
<P>is a bullish sign....as noted above, the latest reading is 1.01 to 1. =
This=20
indicator may become even more </P>
<P>useful, as <EM><FONT color=3D#0000ff>next month companies will be =
required to=20
report insider trades within two days of execution =
rather</FONT></EM></P>
<P><EM><FONT color=3D#0000ff>than the current regulation of reporting by =
the 10th=20
of the month.</FONT></EM></P></DIV></BODY></HTML>

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