Corporate Insiders Selling at Disturbing Rate

Corporate insiders in the U.S. are selling shares at a rate last seen before the Great Recession a decade ago.

The term "insiders" refers to people who work as directors or senior officers of companies, and whose compensation includes things such as stock options and common shares. These insiders have a financial stake in the companies they work for in senior roles.

Because they are invested and have access to data about how their companies are performing before the general public, some investors believe valuable insights can be gleaned by watching whether insiders are putting more or less of their own money into their places of work.

According to research firm TrimTabs, during August, insiders at American companies were selling, on average, $600 million U.S. worth of shares in their own companies a day. Five times this year they've sold more than $10 billion worth of stock in a single month.

The last time the markets saw that much selling that many times in a year was in 2006 and then again in 2007 — right before the stock market imploded in late 2008. Insiders at technology companies, including the so-called FAANG stocks — an acronym for Facebook, Amazon, Apple, Netflix and Google — have been some of the biggest sellers.

INK president Ted Dixon tabulates that U.S. firms are seeing, on average, 55 net buys by insiders for every 100 sells. That's not as low as the 30-per-100 seen earlier in the year, but still considered low by experts — suggestive of an insiders' market that is getting out of the market.