August Busch III, an AT&T Inc board member since 1980, bought US$2.27 million of shares in the biggest US phone company last month, his largest purchase on record. Monsanto Co director William Parfet added to his holdings in the world's No. 1 seed producer for the first time in eight years.
Chief executive officers, directors and other senior officials in corporate America are buying more of their companies' shares than they are selling for the first time since 1995, prompting growing confidence the stock market is poised to rally for the rest of the year.
The last seven times insiders bought more than they sold, between 1988 and 1995, the Standard & Poor's 500 Index rallied an average 21 percent in the following 12 months, data compiled by the Washington Service, a Bethesda, Maryland-based research firm that tracks insider data for more than 500 mostly institutional clients, showed. The purchases show executives believe the worst may be over after stocks suffered the biggest January drop in 18 years on signs the economy is in a recession.
"If it's so bad, how come these guys are gobbling up their own companies' stock? That's the telltale indicator," said Fritz Meyer, 57, a Denver-based senior market strategist at AIM Advisors Inc, which manages about US$166 billion. "Companies are in the best possible position to assess the economic outlook."
Purchases by officers, directors and other senior managers of the 1,911 companies on the New York Stock Exchange reached US$683 million last month, US Securities and Exchange Commission filings compiled by the Washington Service showed.
Total purchases were 1.44 times more than sales, the first time in 13 years that insiders became net buyers, the data showed. The S&P 500, the benchmark for US equities, has not fallen in the 12 months after insiders bought more than they sold, Washington Service data that goes back 20 years showed.
Executives and directors may be underestimating the effect of the US economic slowdown on earnings, said Robin Hepworth, from Allchurches Investment Management Services.
Fourth-quarter profits dropped an average 25 percent for the 289 members of the S&P 500 that have reported so far, data compiled by Bloomberg showed. The economy expanded at a 0.6 percent annual rate in the quarter, half the pace of economists' forecasts, as home construction plunged and banks wrote off mortgage-related losses.
While executives step up buying, short sellers are betting against US companies like never before. The amount of short selling -- when traders sell borrowed shares expecting to buy them back after prices fall -- grew to 3.7 percent of the total shares on the NYSE last month, the highest since at least 1931.
Insiders "are being very brave," Hepworth said. "Against the backdrop of everything going on, this is one positive."
RETHINK? The defense ministry and Navy Command Headquarters could take over the indigenous submarine project and change its production timeline, a source said Admiral Huang Shu-kuang’s (黃曙光) resignation as head of the Indigenous Submarine Program and as a member of the National Security Council could affect the production of submarines, a source said yesterday. Huang in a statement last night said he had decided to resign due to national security concerns while expressing the hope that it would put a stop to political wrangling that only undermines the advancement of the nation’s defense capabilities. Taiwan People’s Party Legislator Vivian Huang (黃珊珊) yesterday said that the admiral, her older brother, felt it was time for him to step down and that he had completed what he
Taiwan has experienced its most significant improvement in the QS World University Rankings by Subject, data provided on Sunday by international higher education analyst Quacquarelli Symonds (QS) showed. Compared with last year’s edition of the rankings, which measure academic excellence and influence, Taiwanese universities made great improvements in the H Index metric, which evaluates research productivity and its impact, with a notable 30 percent increase overall, QS said. Taiwanese universities also made notable progress in the Citations per Paper metric, which measures the impact of research, achieving a 13 percent increase. Taiwanese universities gained 10 percent in Academic Reputation, but declined 18 percent
CHINA REACTS: The patrol and reconnaissance plane ‘transited the Taiwan Strait in international airspace,’ the 7th Fleet said, while Taipei said it saw nothing unusual The US 7th Fleet yesterday said that a US Navy P-8A Poseidon flew through the Taiwan Strait, a day after US and Chinese defense heads held their first talks since November 2022 in an effort to reduce regional tensions. The patrol and reconnaissance plane “transited the Taiwan Strait in international airspace,” the 7th Fleet said in a news release. “By operating within the Taiwan Strait in accordance with international law, the United States upholds the navigational rights and freedoms of all nations.” In a separate statement, the Ministry of National Defense said that it monitored nearby waters and airspace as the aircraft
UNDER DISCUSSION: The combatant command would integrate fast attack boat and anti-ship missile groups to defend waters closest to the coastline, a source said The military could establish a new combatant command as early as 2026, which would be tasked with defending Taiwan’s territorial waters 24 nautical miles (44.4km) from the nation’s coastline, a source familiar with the matter said yesterday. The new command, which would fall under the Naval Command Headquarters, would be led by a vice admiral and integrate existing fast attack boat and anti-ship missile groups, along with the Naval Maritime Surveillance and Reconnaissance Command, said the source, who asked to remain anonymous. It could be launched by 2026, but details are being discussed and no final timetable has been announced, the source