Posts filed under “Analysts”

Stock Buybacks vs Insider Buying: 70:1 Ratio

“While insiders are willing to use corporate cash to try to support the value of their stock-based compensation, they don’t seem to think their stocks are attractively priced.“

-Charles Biderman, Trimtabs


Over the years, I have been critical of Trimtab’s Charles Biderman (See this, this, this and this). I suspect much of the visibility his model was dependent upon to track investor money flows had disappeared into dark pools or derivatives. Thus, the ability to peer into mutual funds asset buying and forecast equity movements was compromised.

My critiques of Biderman’s research has been he has lacked the data to support his views, which were too bullish heading into the 2007 peak, too bearish during the 103% rally. Examples include a late 2007 comment that “Fear and ignorance seem to be gripping retail investors” (Doh!) or  the April 2008 claim that the economy was emerging from the recession (Um, not exactly).

However, in a recent research report, TrimTabs seems to have some ugly Insider Buying data that supports their bearish views.

Biderman observes that while US firms spent $124 billion in stock buybacks in Q2, insiders bought less than $2 billion of company stock with their own money. That 70:1 ratio is a sharp contrast between “what insiders are doing with their own money and what they’re doing with the money of the companies they manage.”

At the 30 firms with the biggest buybacks in 2011, over $168 billion was spent purchasing shares, while there was zero insider buying at 24 of these firms amounting to less than $10 million. Cherry picking aside, that is still a ratio of 16,800:1.

I have not crunched the numbers to see exactly how probative extreme Insider Buying (or the lack thereof) is to future market performance. But it is an intriguing data point that may be worth noting.


The real story behind the market ‘boom’
Brett Arends
Marketwatch, June 29, 2011

Category: Analysts, Corporate Management, Investing

Analysts Exist to Make Economists Look Respectable

“The only function of economic forecasting is to make astrology look respectable.” -John Kenneth Galbraith > Regular readers know that I do not hold the economics profession in particularly high regard. These sociologists too often have an unfortunate unfamiliarity with how Human Beings behave in the wild. Forget forecasting — economic theories fail to adequately…Read More

Category: Analysts, Really, really bad calls

Are Economists Now Too Pessimistic?

Société Générale has a very interesting piece out this morning looking at the notion of economic surprises and a double-dip scenario: “The economic surprise indicator has returned to very low levels, indicating that a lot of negative surprises are now discounted. We don’t believe that the indicator will remain low for long as the drop…Read More

Category: Analysts, Psychology, Really, really bad calls

Blackberry vs Apple vs Droid

About 6 months ago on CNBC Fast Money, I discussed why Blackberry was toast (cant find the video, but it may been this). I was astonished anyone would even defend RIMM against the Apple onslaught. To be blunt, i am surprised RIMM is a still a double digit stock. This was one of the cases…Read More

Category: Analysts, Really, really bad calls, Technology

Time Running Out?

A mention by David Rosenberg in a recent note sent me scurrying to find this report from the San Francisco Fed in August of last year.  The report — remember, it was almost one year ago — used the Leading Economic Indicators to assess the probability of another recession within the next 24 months (from that date,…Read More

Category: Analysts, Cycles, Data Analysis, Economy, Research

While Baghdad Bob Ben Bernanke says that everything is fine, China’s Dagong credit rating agency says the U.S has already defaulted. As AFP reports: “‘In our opinion, the United States has already been defaulting….Washington had already defaulted on its loans by allowing the dollar to weaken against other currencies – eroding the wealth of creditors…Read More

Category: Analysts, Credit, Think Tank

Most Photographed NYC Attraction? 5th Ave Apple Store

This is insane stuff: “Researcher Eric Fischer mapped and analyzed millions of photos on flicker that were taken throughout the city and looked at their geo-tagged information — such as time and date they were shot –to determine patterns of interest. Although the sleek glass exterior of the Fifth Avenue Apple store gets the most…Read More

Category: Analysts, Psychology, Travel, Web/Tech

Zombie Idea: Defaulters’ Retail Spending Spree ?

In April 2010, we discussed the false meme that defaulting homeowners were about to cause a surge in retail spending (Are Defaults Really Driving Retail Spending?). That blessedly data free idea turned out to be wrong. But as the backers of Supply-Side economics will tell you, its hard to keep a bad idea down. Thus, the…Read More

Category: Analysts, Consumer Spending, Foreclosures, Real Estate, Really, really bad calls

LDL: “Let’s Discuss Live”

“LDL” is my new favorite acronym. Call it Wall Street prosecution arcana:  To avoid putting into email any damaging info — especially about insider trading — some of the recent expert networks thought they might avoid prosecutions by using the acronym “LDL.” It is strewn throughout their emails, and informs the reciever that they are…Read More

Category: Analysts, Legal, Web/Tech

Do You Understand Earnings Estimates?

> Run-don’t-walk to see Jim Bianco’s fascinating discussion on Understandings Earnings Estimates. >

Category: Analysts, Earnings