Executives are selling off their company's stock at a record pace

[Hydrogen]

Corporate insiders are dumping stock in their companies at a rate not seen in 10 years.

With September not yet over, stock sales by company executives reached $5.7 billion, according to data from TrimTabs Investment Research -- the highest September in a decade. August's $10.3 billion in insider sales also reached a 10-year record.

At the same time, stock buybacks are roaring ahead, pumping up U.S. share prices to new heights. Companies this year have announced $827 billion in spending to purchase their own shares -- well above the buybacks that took place during all of 2007, which set the previous annual record.

"Insiders have been committing lots of money for stock buybacks, and they're not doing buybacks because they think stocks are cheap. They're doing to it to pump up the stock so they can sell it," said David Santschi, director of liquidity research at TrimTabs.

Some investors like buybacks because they boost the value of the rest of the company's stock. They also bolster top executives' pay, much of which comes in the form of shares. But they're a purely financial play that don't improve a company's position in the long term, the way investing in equipment or in hiring might.

"Stock buybacks have seemed to be the main use of the corporate tax savings this year. Acquisitions haven't been particularly high, and we're not seeing much wage growth," Santschi added.

TrimTabs' figures underestimate the true amount of corporate insider activity, Santschi noted, because only certain insiders -- a company's highest-ranking executives or directors, as well as investors who hold more than 10 percent of the stock -- are required to disclose stock sales. So nonexecutive employees who sell stock aren't included in this measure.

Buybacks have come under scrutiny of late, with Securities and Exchange Commissioner Robert Jackson calling them out in a recent speech. "We give stock to corporate managers to convince them to create the kind of long-term value that benefits American companies and the workers and communities they serve," he said. "Instead, what we are seeing is that executives are using buybacks as a chance to cash out their compensation at investor expense." In June, a group of senators asked the SEC to review its buyback rules.

Said Santschi: "Insiders are doing one thing with their own money, and another thing with shareholders' money."

https://www.cbsnews.com/news/insider-stock-sales-by-company-executives-soar-to-a-record-pace/

....

I've noticed holders of real estate in my area investing more effort into unloading their holdings @ lower prices on the market. I don't pay much attention to real estate but it seems as if they've visibly shifted from "long term hold" to "short term sell" mode.

If execs of large corporations are also investing more effort into unloading their holdings, it could be significant in terms of what direction things will take in the future. We could be witnessing an exodus of big players from markets on the expectation of dwindling sales and plummeting demand based on a lack of growth in wages coupled with tapped out credit, higher inflation, etc.

Uncertain what impact this could have upon bitcoin or crypto if my guesses turn out to be accurate. Maybe this is already reflected in the decreasing values of bitcoin cash, ethereum and other crypto--which could be related to execs dumping their holdings under the expectation that higher value isn't likely to be sustained by growing demand?

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[davis196]

This is something normal.The US economy is under pressure because of the record GDP growth.
The companies will buy back their stocks and pay their debts instead of investing in new machines or hiring more employees.Everyone is preparing for the hard times.
By the way,I wish that those people would buy some bitcoins,with the money they get from the stocks buy-back.

[1Referee]

Uncertain what impact this could have upon bitcoin or crypto if my guesses turn out to be accurate. Maybe this is already reflected in the decreasing values of bitcoin cash, ethereum and other crypto--which could be related to execs dumping their holdings under the expectation that higher value isn't likely to be sustained by growing demand?

I'm pretty sure that BCash is suffering from external selling pressure rather than the main faces behind the coin, especially when you look at Bitmain's increased holdings, and if we have to believe Roger Ver, he also has converted the majority of his net worth to BCash. I don't expect much to change here.

Ethereum has had to deal with external selling pressure as well, but in form of ICO's cashing out, and when you have monster holders such as EOS (they held like 7 million Ether at one point), they have all the power to trash Ether's price to the bottom. I don't think Vitalik is the type of person to dump his holdings, but we never know of course; we only know him through the internet and not personally.

As far as I know, Charlie Lee has been the only one that actually sold all his coins at peak levels, which is a clear indication of how he's not seeing anything of value in Litecoin anymore, and I really can't blame him. Bitcoin with a widely deployed LN is basically the nightmare of any coin focusing on payments. What else than payments has Litecoin to offer? Nothing.

https://techcrunch.com/2017/12/20/litecoin-charlie-lee-conflict-of-interest/

[exstasie]

I've noticed holders of real estate in my area investing more effort into unloading their holdings @ lower prices on the market. I don't pay much attention to real estate but it seems as if they've visibly shifted from "long term hold" to "short term sell" mode.

If execs of large corporations are also investing more effort into unloading their holdings, it could be significant in terms of what direction things will take in the future. We could be witnessing an exodus of big players from markets on the expectation of dwindling sales and plummeting demand based on a lack of growth in wages coupled with tapped out credit, higher inflation, etc.

It smells like large investors are looking to shed risk. The last time this happened on such a large scale, it preceded the 2007-2008 crash.

I never realized how buybacks could prop the market up, but it makes a lot of sense. C-level executives have huge amounts of shares. The corporate buybacks give them the bid liquidity to exit the market at high prices. This transfers their individual risk into shareholder risk. Not a bad move when the stock market feels so inflated, as it does now!

Sort of like when a company IPOs on inflated valuation, so they can transfer all the risk to new investors for a pretty penny.

[Lorna111]

I've noticed holders of real estate in my area investing more effort into unloading their holdings @ lower prices on the market. I don't pay much attention to real estate but it seems as if they've visibly shifted from "long term hold" to "short term sell" mode.

If execs of large corporations are also investing more effort into unloading their holdings, it could be significant in terms of what direction things will take in the future. We could be witnessing an exodus of big players from markets on the expectation of dwindling sales and plummeting demand based on a lack of growth in wages coupled with tapped out credit, higher inflation, etc.

It smells like large investors are looking to shed risk. The last time this happened on such a large scale, it preceded the 2007-2008 crash.

I never realized how buybacks could prop the market up, but it makes a lot of sense. C-level executives have huge amounts of shares. The corporate buybacks give them the bid liquidity to exit the market at high prices. This transfers their individual risk into shareholder risk. Not a bad move when the stock market feels so inflated, as it does now!

Sort of like when a company IPOs on inflated valuation, so they can transfer all the risk to new investors for a pretty penny.

  Interesting to note... But my one cent opinion, whales deals business among them, either buying or corporate restructuring, we seen these, the power shift beyond closed door, yet, what could be the effect of these Dumping into Crypto, they dump via old market structure (Stocks Market). Its been a strategy of some Risk taker whales in the market, i feel sorry if they do that into Crypto Currency Market....

[The Sceptical Chymist]

Great.  Companies are buying back their own stock at inflated prices, thus wasting their own money in an effort to increase the P/E ratio.  

As far as insiders selling stocks goes, that's a smart move on their part precisely because so many stocks are inflated past rational valuations.  They know a crash or a serious correction is going to happen, and they don't want to lose money.  I don't see that as a huge problem.  What I hate to see is share buybacks when the market is in the biggest bull run in years and where the stocks they're buying back are not cheap.

We could be witnessing an exodus of big players from markets on the expectation of dwindling sales and plummeting demand based on a lack of growth in wages coupled with tapped out credit, higher inflation, etc.

Nah.  I think they're just selling stock to free up some cash to build new beach houses, buy new cars, and finance new mistresses.

[GirlBitcoin]

You should not be so worried about this. There are no sellers selling too much, only the sharks are adjusting the market. I do not think my thinking is negative because it's real. I feel that the Crypto market has a lot of real investors and they decide to hold all their altcoins by 2020.

[Kakmakr]

This is a signature move, when people analyse the global economic markets and when these markets are due for a correction. Most of the stock markets are very inflated and long over due for the correction and these executives knows this, so they are jumping ship before this happens. <Getting the most profit for their own shares before the price drop> 

When migrating birds start to leave, people should take notice that the Winter is around the corner. The executives know how to read the early signs of the economic Winter that are on our doorstep. 

[stompix]

Uncertain what impact this could have upon bitcoin or crypto if my guesses turn out to be accurate. Maybe this is already reflected in the decreasing values of bitcoin cash, ethereum, and other crypto--which could be related to execs dumping their holdings under the expectation that higher value isn't likely to be sustained by growing demand?

I'm pretty sure that BCash is suffering from external selling pressure rather than the main faces behind the coin, especially when you look at Bitmain's increased holdings, and if we have to believe Roger Ver, he also has converted the majority of his net worth to BCash. I don't expect much to change here.

Ethereum has had to deal with external selling pressure as well, but in form of ICO's cashing out, and when you have monster holders such as EOS (they held like 7 million Ether at one point), they have all the power to trash Ether's price to the bottom. I don't think Vitalik is the type of person to dump his holdings, but we never know of course; we only know him through the internet and not personally.

And it's not over for those two and for many others.

Bcash will continue to breathe as long as Bitmain is trying to keep it alive but at one point it will have to let it go, as they will realize they are spending more money than they would ever make from the profits.

As for ETH, I think the only thing that keeps it above 100$ is fear, from the little holders that think something will change and that somehow ETH will grow back to 1000$, to the big guys that know one single move would make them lose millions. Sort of a Mexican stand-off where everybody is praying that the other won't sell and trigger another dump.

Wait for the onslaught once the ICO madness will start to show its real face to everybody and hundreds if not thousands of investors with their eyes glued on phony roadmaps will see 2019 passing by and no real product whatsoever. At this point, people are afraid only of scams that are not even giving them tokens, once even tokens that had behind a real company and real people turn worthless it's going to be fun as we're going to see billions in fake market cap evaporating.

We could be witnessing an exodus of big players from markets on the expectation of dwindling sales and plummeting demand based on a lack of growth in wages coupled with tapped out credit, higher inflation, etc.

Nah.  I think they're just selling stock to free up some cash to build new beach houses, buy new cars, and finance new mistresses.

Inflation will go up, more money out of the blue, growing demand for cars and houses and mistresses and russian brides, it doesn't matter if wages remain at the same level, the decisive factor is how much of that money will be thrown in the economy,stashed away or spent away in a foreign country.

 

[Tory-Tory]

Corporate insiders are dumping stock in their companies at a rate not seen in 10 years.

With September not yet over, stock sales by company executives reached $5.7 billion, according to data from TrimTabs Investment Research -- the highest September in a decade. August's $10.3 billion in insider sales also reached a 10-year record.

At the same time, stock buybacks are roaring ahead, pumping up U.S. share prices to new heights. Companies this year have announced $827 billion in spending to purchase their own shares -- well above the buybacks that took place during all of 2007, which set the previous annual record.

"Insiders have been committing lots of money for stock buybacks, and they're not doing buybacks because they think stocks are cheap. They're doing to it to pump up the stock so they can sell it," said David Santschi, director of liquidity research at TrimTabs.

Some investors like buybacks because they boost the value of the rest of the company's stock. They also bolster top executives' pay, much of which comes in the form of shares. But they're a purely financial play that don't improve a company's position in the long term, the way investing in equipment or in hiring might.

"Stock buybacks have seemed to be the main use of the corporate tax savings this year. Acquisitions haven't been particularly high, and we're not seeing much wage growth," Santschi added.

TrimTabs' figures underestimate the true amount of corporate insider activity, Santschi noted, because only certain insiders -- a company's highest-ranking executives or directors, as well as investors who hold more than 10 percent of the stock -- are required to disclose stock sales. So nonexecutive employees who sell stock aren't included in this measure.

Buybacks have come under scrutiny of late, with Securities and Exchange Commissioner Robert Jackson calling them out in a recent speech. "We give stock to corporate managers to convince them to create the kind of long-term value that benefits American companies and the workers and communities they serve," he said. "Instead, what we are seeing is that executives are using buybacks as a chance to cash out their compensation at investor expense." In June, a group of senators asked the SEC to review its buyback rules.

Said Santschi: "Insiders are doing one thing with their own money, and another thing with shareholders' money."

https://www.cbsnews.com/news/insider-stock-sales-by-company-executives-soar-to-a-record-pace/

....

I've noticed holders of real estate in my area investing more effort into unloading their holdings @ lower prices on the market. I don't pay much attention to real estate but it seems as if they've visibly shifted from "long term hold" to "short term sell" mode.

If execs of large corporations are also investing more effort into unloading their holdings, it could be significant in terms of what direction things will take in the future. We could be witnessing an exodus of big players from markets on the expectation of dwindling sales and plummeting demand based on a lack of growth in wages coupled with tapped out credit, higher inflation, etc.

Uncertain what impact this could have upon bitcoin or crypto if my guesses turn out to be accurate. Maybe this is already reflected in the decreasing values of bitcoin cash, ethereum and other crypto--which could be related to execs dumping their holdings under the expectation that higher value isn't likely to be sustained by growing demand?

If such a situation really exists in the market, then we will can see how a part of the capital leaves the stock market. The question becomes interesting: where will this capital go? if at least a small part of it goes into crypto currencies, then we will have good times for holders.

[Agniya]

An interesting development. I think soon we can see importent news for the cryptocurrency market.

[dothebeats]

They know what's up with the markets with the recent stocks exceeding normal valuation, it is bound to correct at some point in time. Perhaps they are already expecting for the worst, thus selling stocks and shares now rather than selling it for lower value later. I can't really see any correlation for this in the cryptomarket, not unless most of these executives are already knee-deep on their involvement with crypto. Nonetheless, there might be a financial crisis looming since the pattern is somewhat similar to the 2008 recession.

[coolcoinz]

People always overdo it and when something is in high demand they jump in to ride that horse until it dies from exhaustion. The real estate bubble started to grow many years ago and now there's more new houses being built than people in need of buying them. Maybe you have noticed this move from the suburbs and small towns into the city. Now it's the other way round. People are leaving big cities to live closer to nature. They prefer their own small house with a garden from a downtown condo where opening a window brings in the smell of fumes and street food.

[green547]

The stock market is due for a major correction. Considering the pro Price Earnings Ratio stocks are massively overpriced.  From what I've read most economists think another major crash is imminent in the near future.

It's hard for me to believe in a company's success if their own executives are selling large amounts of stock.

[magneto]

If these things are indeed true - if executive are selling their company shares and dumping their portfolios of investments, it could seriously be a sign of what to come.

The growth in some sectors may indeed going to be slowing down, and those who know it best may be acting now to get rid of their stake in things and cash it out before a recession of some sort strikes or whatnot.

The point that stock buybacks are only used to hype prices up for dumping their own shares is also interesting, although unconfirmed.

The stock market is due for a major correction. Considering the pro Price Earnings Ratio stocks are massively overpriced.  From what I've read most economists think another major crash is imminent in the near future.

It's hard for me to believe in a company's success if their own executives are selling large amounts of stock.

I echo this sentiment, stock markets are bound to head for another crash sooner or later, but whether sooner or later, we're unsure. All we can do at this stage is wait and see what happens, and especially what would result for the crypto markets. Would they be affected just as much as the stock market? I personally don't think so.

[fairyvibes]

The Stock market will for sure crash but it won't even be close to the crypto market crash.  A stock crash would be like 20 percent which is just another day in crypto land.

[wuvdoll]

But my one cent opinion, whales deals business among them, either buying or corporate restructuring, we seen these, the power shift beyond closed door, yet, what could be the effect of these Dumping into Crypto, they dump via old market structure (Stocks Market). Its been a strategy of some Risk taker whales in the market, i feel sorry if they do that into Crypto Currency Market....

It is very normal to see things like this happen a lot when a market is highly inflated and in cases like that we all know that every investor, most especially the large ones will definitely be taking the huge step of shedding risks as the case may be.

Now dumping on the crypto market however, is something that even without them, we have been seeing already over the years, and usually this is how most institutions tend to do their thing. I really feel sorry for them if they do, but one thing is that when executives are dumping, it can generally affect a lot quickly which is why I feel with bitcoin being a very useful currency with faster transaction and wide adoption, things like this will change.

[audaciousbeing]

One reason why I cannot buy shares in corporate organisations because of the attitudes of both the executive directors and their non-executive counterparts that irrespective of the several controls put in place by law, ethics, corporate governance, a standing regulatory body, government enforcing arms etc. they still find a way to enrich themselves and not only in the fat remuneration they pay but also in paying themselves with share options after which they engage in trading of the company's share by proxy, engage in insider information and be mega rich all at the expense of both investors and their shareholders. This I have seen in my brief stint with activities in the stock market.

I think there is nothing that can be done to stop all these nonsense that is happening in the corporate world because after when a new policy is brought on board, others that have done it are exempted while the others would continue to study loopholes in the existing rule then exploit it. What we have again is another round of noises all over. If all of these are happening in the developed economies, I wonder how much atrocities that would be committed by these corporate rogues in less developed stock markets in the world.

[Bitcotalk]

Well no surprise because right now we are in the greatest bull run of our history and since 2008 the companies have been making more and more profits with more and more shares going insanely high breaking their ATH prices. Also we see the world around us collapsing like in 2008 when greece and italy and spain was in danger, right now we see turkey and venezuela and other countries having the same.

How long do you think the economical crisis starts to hit these companies? When you do not have people to sell to, you will not make as much money obviously so they realize another bubble burst is on the way and they are selling from top to get out.