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Posted by on Oct 17, 2013 in AdvisorShares, Investment Perspective, TrimTabs

Float Research: Insider Sell/Buy Ratio in September Highest since February.

Float Research: Insider Sell/Buy Ratio in September Highest since February.

Minyi Chen, CFA, Chief Operating Officer of TrimTabs Investment Research and Portfolio Manager of AdvisorShares TrimTabs Float Shrink ETF (NYSE Arca: TTFS) shares recent fund flow trends.

Dealogic Reports $4.6 Billion in New Shares Already Scheduled to Price This Week.

The circus in Washington has clearly made investors nervous, particularly in the short-term funding markets. Leveraged ETF investors have turned extremely upbeat, which is bearish from a contrarian perspective.  Leveraged short ETFs shed 4.9% of assets in the past week, the biggest outflow in 16 weeks, while leveraged long ETFs issued 4.1% of assets.  U.S. equity ETF flows have been more encouraging.  These ETFs posted outflows on four out of five days in the past week, and the trailing one-month inflow has dropped to $8.2 billion (1.0% of assets), the lowest level in four weeks.  We pay careful attention to ETF flows because our research shows that they tend to be a good contrary indicator.

Corporate insiders have been committing plenty of cash to support stock prices, which is a safe choice for capital allocation in a no-growth economy with artificially low interest rates.  Although buyback announcements have gotten off to a slow start in earnings season, buybacks hit a record $4.5 billion daily in pre-earnings season thanks to Microsoft’s $40.0 billion buyback increase.  Since the start of September, announced corporate buying (new cash takeovers + new stock buybacks) of $89.8 billion has been 2.4 times higher than new offerings of $37.4 billion.  While insiders are committing plenty of shareholders’ money to buy back shares, they are buying little with their own money.  Insider buying fell to a seven-month low of $370 million in September, the insider sell/buy ratio rose to 14.2, the second-highest level this year.
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