Insider Buys and Sells: Weekly Wrap-up
Monday, November 2, 2009 | Tycoon StaffRating:
For all the analysts and pundits in the financial media, there is still no better judge of a company's health and future prospects than the owners and executives of those companies themselves, along with major institutional shareholders.
That's why insider buying and selling is a critical piece of data that is monitored by people who invest for a living.
As part of our continuing efforts here at The Tycoon Report to level the playing field between individual investors and the fat cats on Wall Street, we're keeping you informed -- on a daily basis and at no cost whatsoever -- of the most significant insider buying and selling.
Below is a weekly re-cap of the past week's activity of important insider buys and sells. We aim to publish this re-cap every Monday, and it can be accessed in your e-mail issues or on the Tycoon Report Web site.
Very important note: While these re-caps are available on the Tycoon Report Web site, if you want the most timely information we provide on insider buying and selling, be sure to read the e-mail issues that we send each weekday morning.
That's why insider buying and selling is a critical piece of data that is monitored by people who invest for a living.
As part of our continuing efforts here at The Tycoon Report to level the playing field between individual investors and the fat cats on Wall Street, we're keeping you informed -- on a daily basis and at no cost whatsoever -- of the most significant insider buying and selling.
Below is a weekly re-cap of the past week's activity of important insider buys and sells. We aim to publish this re-cap every Monday, and it can be accessed in your e-mail issues or on the Tycoon Report Web site.
Very important note: While these re-caps are available on the Tycoon Report Web site, if you want the most timely information we provide on insider buying and selling, be sure to read the e-mail issues that we send each weekday morning.
SELLS
AmeriCredit Corp. (ACF)
Chairman of the Board Clifton H. Morris Jr. SOLD $4 million in shares. View details.
Caterpillar (CAT)
Group President Edward J. Rapp SOLD $3.1 million in options. View details.
Core Labs (CLB)
VP & CAO Charles Brigham Miller SOLD $3 million shares. View details.
CSX Corp. (CSX)
EVP and CCO Clarence W. Gooden SOLD $1.5 million in shares. View details.
GSI Commerce Inc. (GSIC)
CEO and President Michael Rubin SOLD $3 million in shares. View details.
Kimberly-Clark (KMB)
Chairman of the Board and CEO Thomas J. Falk SOLD $12.6 million in options. View details.
Group President Robert E. Abernathy SOLD $1 million in options. View details.
IBM (IBM)
Sr. VP and CFO Mark Loughridge SOLD $1.2 million in shares and $4.5 million in options. View details.
Ingersoll-Rand (IR)
Senior Vice President Patricia Nachtigal SOLD $1.9 million in options. View details.
Chairman & CEO Herbert L. Henkel SOLD $3.2 million in options. View details.
Senior Vice President and CFO Steven R. Shawley SOLD $1.4 million in options. View details.
Intuitive Surgical Inc. (ISRG)
CEO Lonnie M. Smith SOLD $2.2 million in options and ???$1.7 million in shares. View details.
Juniper Networks (JNPR)
Chairman of the Board Scott Kriens SOLD $12.9 million in options. View details.
McDonald's (MCD)
President and COO Ralph Alvarez SOLD $1.2 million in shares and $2.3 million in options. View details.
Precision Castparts Corp. (PCP)
Chairman and CEO Mark Donegan SOLD $12.1 million in options. View details.
Reliance Steel & Aluminum Co. (RS)
Exec VP, CFO and Asst Sec Karla R. McDowell SOLD $2.4 million in options and $1.7 million in shares.
View details.
Robert Half International (RHI)
Director Frederick P. Furth SOLD $2.6 million in shares. View details.
Vice Chairman, President & CFO M. Keith Waddell SOLD $1.3 million in shares. View details.
President & COO Paul F. Gentzkow SOLD $1.3 million in shares. View details.
St. Jude Medical (STJ)
President, AF Division Jane Song SOLD $1.4 million in options. View details.
Tupperware (TUP)
Chairman and CEO E.V. Goings SOLD $4.6 million in shares. View details.
Economic Calendar for the Week of Nov. 2-6
MONDAY, NOV. 2
10 a.m. Institute for Supply Management (ISM)
* Importance (A-F): This release merits an A-.
* Source: Institute for Supply Management
* Release Time: 10 a.m. Eastern on the first business day of the month for the prior month.
* Raw Data Available At: http://www.ism.ws
The ISM report is a national survey of purchasing managers that covers such indicators as new orders, production, employment, inventories, delivery times, prices, export orders and import orders.
The total index is calculated based on a weighted average of the following five sub-indexes, with weights in parentheses: new orders (30%), production (25%), employment (20%), deliveries (15%) and inventories (10%).
The ISM is one of the first comprehensive economic releases of the month, typically preceding the employment report. Though it covers only the manufacturing sector, it can often provide accurate hints regarding the tone of subsequent releases. During periods of inflation concerns, the prices paid and vendor deliveries indexes often determine the bond market's reaction to the report.
Highlights
* The ISM manufacturing index declined 0.3 percentage points to 52.6 in September. The index came in well-below consensus expectations of a jump to 54.0.
* New orders fell to 60.8 from 64.9, but are still well-above the 50.0 threshold for an expanding market.
* The inventory cycle continues to be a problem. The contraction in manufacturing inventories has slowed down as the index increased to 42.5 from 34.4. The increase bodes well for suppliers of raw materials. However, customer inventories remain depressed as the index failed to move from last month's 39.0 reading.
* Other components of the index were mixed:
- The employment reading declined to 46.2 from 46.4 and have been contracting for the last 14 months.
- Supplier deliveries increased 0.9 percentage points to 58.0, which correlates with the increase in inventory levels noted above.
- The price index declined to 63.5 from 65.0.
- Backlogs continued expanding as the index increased to 53.5 from 52.5.
- Finally, both the import and export sectors are in an expansion phase as imports increased to 52.0 from 49.5 while exports declined to 55.0 from 55.5.
Key Factors
* Even with the slight disappointment in the September reading, the national manufacturing sector looks much better than the Chicago region.
* The new-orders ISM index contradicts the data just released by the Census Bureau. The Census Bureau reported that new orders for durable goods had dropped significantly over the last month. If the ISM release is going to correlate with the complete factory new-orders report, we will need to see a strong showing in the non-durable manufacturing sector.
* Once consumer demand picks up, we should see an increase in customer inventory levels and, as a result, an increase in production as manufacturers rush to replenish the stock shelves.
Big Picture
* This is a highly overrated index. It is merely a survey of purchasing managers. It is a diffusion index, which means that it reflects the number of people saying conditions are better compared to the number saying conditions are worse. It does not weight for size of the firm, or for the degree of better/worse. It can therefore underestimate conditions if there is a great deal of strength in a few firms. The data have thus not been either a good forecasting tool or a good read on current conditions during this business cycle. It must be recognized that the index is not hard data of any kind, but simply a survey that provides broad indications of trends.
WEDNESDAY, NOV. 4
10 a.m. Non-Manufacturing ISM: Institute for Supply Management
* Importance (A-F): This release merits an improved B-.
* Source: Institute for Supply Management
* Release Time: 10 a.m. Eastern on the third business day of the month for the prior month.
* Raw Data Available At: http://www.napm.org
The non-manufacturing ISM report is a national survey of purchasing managers which covers new orders, employment, inventories, supplier delivery times, prices, backlog orders, export orders and import orders. Diffusion indexes are produced for each of these categories, with a reading over 50% indicating expansion relative to the prior month, and a sub-50% reading indicating contraction.
The index should be far more indicative of the broader economy given its inclusion of service-producing as well as good-producing sectors outside of manufacturing. However, the short history of the index dates to only July 1997 and doesn't provide the insight of a longer period inclusive of varied economic climates.
The seasonal adjustment of the index didn't begin until January 2001 with only 3 of the 9 components seasonally adjusted as of April 2001. The lack of historical data and lack of a tight correlation to the non-manufacturing economy leaves the relatively poor "B-" rating compared to the "A-" rating of the well-respected manufacturing ISM index.
Highlights
* The ISM non-manufacturing report soundly beat the consensus forecast (50.0) in September as the index jumped to 50.9 from 48.4.
* The data from the service sector looks strong.
* Business activity/production increased to 55.1 from 51.3 and expanded for the second-consecutive month.
* New orders, which was one of the biggest reasons for the slight decline in the manufacturing ISM report, surged to 54.2 from 49.9 and entered an expansion phase.
* At the same time, backlog of orders rose to 51.5 from 41.0 which should give the industry strength as we move into Q4.
* Employment remains a concern as the employment index crept slightly higher to 44.3 from 43.5. Employment has contracted for 17 consecutive months.
* Deliveries were essentially unchanged as the index increased to 50.0 from 49.0.
* Prices continue to be highly volatile and swung into a deflationary phase in September. The index dropped from 63.1 to 48.8. We continue to believe prices will moderate further as unemployment rises through the middle of 2010.
* The biggest problem area continues to be in the inventory sector as the index increased from 43.0 to 47.5.
Key Factors
* The latest report confirms the market's suspicion that the service industry had entered an expansion phase after 11 consecutive months of contraction. Since services represent 66% of total personal consumption, the ISM numbers suggest strong consumption growth in the near future.
* However, due to the way the diffusion index is created, the ISM reading only concretely states that the number of service related firms posting positive growth has increased over the last month compared to the numbers firms posting negative views.
* The ISM non-manufacturing index does not differentiate between between size of firms or value of output. It is very possible that many small firms pushed the index high through increases in activity whereas the larger firms, which produce most of the output, continued seeing declines. In this case, the higher reading will not correlate well with an increase in consumption.
* While the inventory contraction has slowed, the cycle has entered its 13th-consecutive month. To make matters worse, inventory sentiment continues to be way too high as the sentiment index remains well-above 60 at 62.0. Until inventories decline, business activity in both the non-manufacturing and manufacturing sectors will be limited.
Big Picture
* The market generally doesn't pay much attention to the services index because the service sector is less-cyclical than the manufacturing sector. During the current recession, the service index held steady around 50% through September 2009 before bottoming at 37.4% in November 2008. Since then, the service index has slowly risen back and finally broke the 50.0% barrier. In contrast, the manufacturing index, with the exception of January 2009, stayed below 50% from December 2008 through July 2009 and bottomed at 32.9% in December 2008.
FRIDAY, NOV. 6
8:30 a.m. The Employment Report
* Importance (A-F): This release merits an A.
* Source: Bureau of Labor Statistics, U.S. Department of Labor.
* Release Time: First Friday of the month at 8:30 a.m. Eastern for the prior month
* Raw Data Available At: http://stats.bls.gov/news.release/empsit.toc.htm
The employment report is really two reports -- the household survey and the establishment survey. These two surveys contain a wealth of timely information that justify this report's status as the most-important economic release of the month.
Highlights
* The consensus expected the labor situation to improve and projected payrolls to decline by only 175,000.
* Instead of an improvement, payrolls fell 263,000 -- worse than even the ADP employment report projected.
* The unemployment rate increased 0.1 percentage points to 9.8%, exactly what the consensus was expecting.
* Total private weekly hours worked declined 0.1 hours to 33.0, below the consensus expectation of 33.1. Further, hourly pay only increased 0.1%, also below consensus expectations. Looking at the payrolls a little more closely, there is no sign of an improvement in employment in the near future.
* Government payrolls declined 53,000 as state and local government budget cuts forced out workers.
* Construction and manufacturing employment declined by a combined 115,000.
* Service-providing firms shed 147,000 jobs as retail trade lost 39,000 jobs, business and professional service lost 8,000 jobs, and leisure and hospitability employment declined 9,000.
* Only the education and health service sector posted positive employment gains, but the increase was extremely small with only 3,000 new jobs.
Key Factors
* The employment report came in well worse-than-expected in September.
* The unemployment rate is very misleading. The civilian labor force declined 571,000 in September compared to an increase in the labor force of 73,000 in August. If the labor force held steady in September, the unemployment rate would have increased to 10.2%!
* The drop in hours worked and the lack of a strong increase in pay pushed weekly earnings down 0.2% and will lead to lower consumption from people who have maintained their jobs over the last month.
Big Picture
* Weekly claims for unemployment have to drop below 400,000 before payrolls will stabilize.
* Limited wage growth and declining payroll levels are a recipe for very poor consumer confidence and sluggish consumer spending.
Source: Briefing.com
