Go to Jeff Salisbury LWGate Home Page.From: "Tom Worley" <stkguru@bellsouth.net>
Subject: Re: [CANSLIM] Insider Trades
Date: Thu, 29 Aug 2002 09:07:12 -0400
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This is a multi-part message in MIME format. - ------=_NextPart_000_0070_01C24F3B.75F9B8C0 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable I have always ignored insider selling as "noise", since there are many = reasons behind it (buying a house, diversifying their finances, new car, = college tuition, options in the money and about to expire, etc.) that = have nothing to do with "M", their company, or anything else we could = care about. On the other hand, I know of only two good reasons for = insiders to be a buyer - hype the stock (build confidence), or to make = money (they see it as their best investment opportunity).=20 On the other hand, I have found few insiders that really understand the = markets and how the investment community behaves. And insiders that have = sold are prohibited from buying new shares within 12 months, I think, so = they can't trade their company stock. A parity ratio is indeed significant, especially given corporate = governance issues today, and the new rules on disclosure about to take = affect. But we also don't want bullish sentiment, we want everyone = scared of a total collapse!! With Martha Stewart now being sued by a = shareholder for selling her own company stock (presumably in = anticipation of it tanking eventually when her Imclone trade being = revealed, which both happened later), I also wonder how many insiders = may be deciding not to sell for fear of perception, especially if they = know there is anything questionable. Oh, I am so cynical these days!!! Guess that's what happens when I get = stopped out on two stocks in just one day, and I don't normally even use = hard stops. - ----- Original Message -----=20 From: Katherine Malm=20 To: canslim@lists.xmission.com=20 Sent: Thursday, August 29, 2002 8:52 AM Subject: [CANSLIM] Insider Trades 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. - ------=_NextPart_000_0070_01C24F3B.75F9B8C0 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable <!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN"> <HTML><HEAD> <META http-equiv=3DContent-Type content=3D"text/html; = charset=3Diso-8859-1"> <META content=3D"MSHTML 6.00.2719.2200" name=3DGENERATOR> <STYLE></STYLE> </HEAD> <BODY bgColor=3D#ffffff> <DIV><FONT face=3DArial>I have always ignored insider selling as = "noise", since=20 there are many reasons behind it (buying a house, diversifying their = finances,=20 new car, college tuition, options in the money and about to expire, = etc.) that=20 have nothing to do with "M", their company, or anything else we could = care=20 about. On the other hand, I know of only two good reasons for insiders = to be a=20 buyer - hype the stock (build confidence), or to make money (they see it = as their best investment opportunity). </FONT></DIV> <DIV> </DIV> <DIV><FONT face=3DArial>On the other hand, I have found few insiders=20 that really understand the markets and how the investment community = behaves. And insiders that have sold are prohibited from buying new = shares within 12 months, I think, so they can't trade their company = stock.</FONT></DIV> <DIV> </DIV> <DIV><FONT face=3DArial>A parity ratio is indeed significant, especially = given=20 corporate governance issues today, and the new rules on disclosure about = to take=20 affect.</FONT> <FONT face=3DArial>But we also don't want bullish = sentiment,=20 we want everyone scared of a total collapse!! With Martha Stewart now = being sued=20 by a shareholder for selling her own company stock (presumably in = anticipation=20 of it tanking eventually when her Imclone trade being revealed, which = both=20 happened later), I also wonder how many insiders may be deciding not to = sell for=20 fear of perception, especially if they know there is anything=20 questionable.</FONT></DIV> <DIV><FONT face=3DArial></FONT> </DIV> <DIV><FONT face=3DArial>Oh, I am so cynical these days!!! Guess that's = what=20 happens when I get stopped out on two stocks in just one day, and I = don't=20 normally even use hard stops.</FONT></DIV> <DIV><FONT face=3DArial></FONT> </DIV> <DIV>----- Original Message ----- </DIV> <DIV style=3D"FONT: 10pt arial"> <DIV style=3D"BACKGROUND: #e4e4e4; font-color: black"><B>From:</B> <A=20 title=3Dkmalm@earthlink.net = href=3D"mailto:kmalm@earthlink.net">Katherine Malm</A>=20 </DIV> <DIV><B>To:</B> <A title=3Dcanslim@lists.xmission.com=20 href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>= </DIV> <DIV><B>Sent:</B> Thursday, August 29, 2002 8:52 AM</DIV> <DIV><B>Subject:</B> [CANSLIM] Insider Trades</DIV></DIV> <DIV><BR></DIV> <DIV>Hi All,</DIV> <DIV> </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 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> </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> - ------=_NextPart_000_0070_01C24F3B.75F9B8C0-- - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email.
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