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(Bloomberg) -- Shares of US companies roared to a record this week, seemingly shrugging off worries about tariffs, immigration and inflation. Yet, company executives are doing something decidedly less bullish — they’re selling their stocks at a rapid pace.
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A gauge of insider sentiment that tallies the number of buyers versus sellers shows there were just 98 companies where at least one insider purchased the company’s shares this month through Jan. 22, compared with 447 at which at least one insider sold, according to data compiled by the Washington Service. With a little over a week of trading left in January, that buy-sell ratio, at 0.22, is currently on track to be the lowest in data going back to 1988.
That amount of selling doesn’t usually inspire confidence with investors, since it suggests corporate leaders who run the companies lack conviction in their own stock. Yet such signals should be taken with a grain of salt, given there are many factors that can lead to a sale, including overall market performance, share value and the executives’ personal reasons.
Apart from a natural seasonality in the pattern of insider sales, this time they were were concentrated in the large technology companies that saw huge gains in 2023 and 2024, says Mark Hackett, chief market strategist at Nationwide.
“Following a tremendous two-year run in equities, particularly in the area seeing the bulk of the selling, it is natural to see a surge in selling,” Hackett said. “It is important to watch, as it could indicate fading confidence in the risk/reward profile of the group of stocks with elevated valuations; it is important not to react, as it could be part of risk control and may not reflect lack of confidence.”
That explains why another set of data helps paint a fuller picture of sentiment that companies have for their own stocks — corporate buybacks.
Data from Birinyi Associates shows buybacks for January are at the strongest level since at least 1999. Major US companies, including General Electric Co., Citigroup Inc. and Netflix Inc. have announced plans to buy back stock this month.
According to Jeff Rubin, Birinyi’s head of research, US companies have announced over $48 billion in buybacks through the close of Jan. 22, putting it on pace for the strongest January since 1999, the farthest that data goes.