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. This communication is a publication of TrimTabs Asset Management. It should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. Information presented does not involve the rendering of personalized investment advice. Content should not be construed as an offer to buy or sell, or a solicitation of any offer to buy or sell the securities mentioned herein. Performance results for investment indexes and/or categories, generally do not reflect the deduction of transaction and/or custodial charges or the deduction of an investment-management fee, the incurrence of which would have the effect of decreasing performance returns. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Past performance may not be indicative of future results. Therefore, no investor should assume that the future performance of any specific investment or investment strategy will be profitable or equal to past performance levels. All investment strategies have the potential for profit or loss. Changes in investment strategies, contributions or withdrawals, and economic conditions, may materially alter the performance of an investor’s portfolio. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will be suitable or profitable for an investor’s portfolio.