U.S. Insider Stock Sales Turn Less Favorable: Technical Analysis

U.S. companies and their executives are selling stocks at 2.2 times the pace of buying, the most since December 2009, as an equity rally pushed the Standard & Poor’s 500 Index (SPX) to an almost four-year high.

About $15.3 billion of shares have been sold by companies and insiders this month, compared with $7.1 billion of purchases, according to TrimTabs Investment Research. Stock offerings reached $2.7 billion a day last week, the highest level since May, the data show. Simon Property Group Inc., the largest U.S. mall owner, announced its first stock offering in almost three years while Internet company Yelp Inc. went public.

“Our supply indicators have turned markedly less favorable in March,” Charles Biderman, chief executive officer at the Sausalito, California-based firm, wrote in a report dated yesterday. “We are not greatly concerned that corporate buying has been unspectacular,” he said. “What worries us more is that new offerings and insiders’ selling have soared.”

Companies and their senior officers are taking advantage of a rally that lifted the S&P 500 by 25 percent from an October low to unload equity holdings. Stocks have rallied as corporate earnings beat analysts’ estimates for a 12th straight quarter and reports on housing and the labor market boosted optimism about the world’s largest economy.

U.S. companies and insiders are selling more stock than they’re buying for the first time since March 2011, according to TrimTabs data. Simon Property raised $1.75 billion last week after boosting its stock offering to 8.5 million shares from 7 million. Yelp, which runs a site that lets users review businesses ranging from diners to dentists, raked in $107.3 million after pricing the shares above a range it sought.

The number of insider sellers averaged about 43 a day in the 30 days through March 5, the highest level since at least 2004, according to Bloomberg data for S&P 500 companies. The last two peaks of insider selling, in March 2010 and March 2011, both came before market tops the next month.

To contact the reporter on this story: Lu Wang in New York at lwang8@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net

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