What Corporate Insiders Are Doing (Again!)

You should be very angry if you own any stocks. Insiders, namely senior executives at major corporations are again doing what they have historically done at important tops: using corporate cash and borrowings to do stock buybacks for their companies at high prices, ostensibly to increase per share earnings by reducing the number of shares outstanding, while bailing out of their own personal holdings at record rates. Take a look at these charts:

As we see, buybacks at high prices are at record rates this year. Last time they did this was in 2007, just before the market fell apart.. Now look at what these guys are doing with their own holdings:

The red line is for Insider selling. They were big sellers in 2000, again in ’07, and again now.

Whatever you may think of the character of corporate executives using company cash to buy expensive stock, while getting out of their own stock, you have to admit their record of self-servingly selling at tops and buying at bottoms is impeccable. I think it’s scurrilous. It does the shareholder no good at all to have their companies loaded up with debt to buy stock at top dollar.

The notion that the company is reducing its share float is a damn lie. Said shares become treasury stock, which then can be issued to these sociopathic execs at a later date as stock options.

But then, it’s not illegal. Small comfort, right?

Rod

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