Insider Buys and Sells: Weekly Wrap-up
Monday, June 29, 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.
BlackRock Inc. (BLK)
President Robert Kapito SOLD $1.5 million in shares. View details.
Blue Coat Systems Inc. (BCSI)
President and CEO Brian M. Nesmith SOLD more than $1.2 million in shares. View details here.
FactSet Research Systems Inc. (FDS)
President & COO Michael F. Dichristina SOLD $1.2 million in shares. View details.
National Semiconductor Corp. (NSM)
President & COO Donald MacLeod SOLD nearly $1.3 million in options. View details.
Omnicare Inc. (OCR)
President & CEO Joel F. Gemunder SOLD $2 million in options. View details.
The TJX Companies Inc. (TJX)
SEVP, Group President Jerome R. Rossi SOLD $1.3 million in options. View details here.
Urban Outfitters (URBN)
Chief Executive Officer Glen T. Senk SOLD $3.7 million in shares. View details.
Economic Calendar for the Week of June 29-July 3
TUESDAY, JUNE 30
9 a.m., Conference Board Consumer Confidence
* Importance (A-F): This release merits a B-.
* Source: The Conference Board.
* Release Time: 10 a.m. Eastern on the last Tuesday of the month (data for current month).
* Raw Data Available At: http://www.tcb-indicators.org
The Conference Board conducts a monthly survey of 5,000 households to ascertain the level of consumer confidence. The report can occasionally be helpful in predicting sudden shifts in consumption patterns, though most small changes in the index are just noise. Only index changes of at least five points should be considered significant.
The index consists of two subindexes -- consumers' appraisal of current conditions and their expectations for the future. Expectations make up 60% of the total index, with current conditions accounting for the other 40%. The expectations index is typically seen as having better leading indicator qualities than the current conditions index.
Highlights
* The Conference Board's Consumer Confidence Index for May increased sharply to 54.9 from 40.8 in April. The May number is the highest since last September, but still trails the 58.1 reading seen a year ago.
* The index for May showed that consumers are feeling much better about the outlook. The Expectations Index, which drove the overall reading for May, surged to 72.3 from 51.0 in April and is well ahead of the 47.3 reading from a year ago.
* The Present Situations Index moved up to 28.9 from 25.5 and is still well below the year-ago reading of 74.2.
* Looking six months out, a larger number of respondents than in April feel business conditions will be better (23.1 vs. 15.7), that more jobs will be available (20.0 vs. 14.2) and that income will increase (10.2 vs. 8.3). Strikingly, fewer respondents have plans to buy a home (2.3 vs. 2.6). Also, it is believed the inflation average 12 months hence will be 5.6% versus 5.9% in April.
Key Factors
* Personal consumption expenditures are the hard data, and it is the increases/decreases in disposable personal income that drive spending more so than confidence. Still, the uptick in confidence plays a part in spending decisions.
One should remain open to the idea that there will be some volatility in this series until there is more confidence in the employment situation and the housing market.
Big Picture
* Consumer sentiment indices get way too much attention. The simple fact is that sentiment does not correlate with consumer spending and thus has little predictive value. Consumer spending correlates more closely with income. Sentiment tends to reflect well known factors such as unemployment rates and gas prices more than it predicts future spending patterns.
9:45 a.m. Chicago Purchasing Managers' Index
* Importance (A-F): The Chicago PMI merits a B.
* Source: Kingsbury International Ltd. and Institute for Supply Management -- Chicago Inc.
* Release Time: Typically the last business day of the month at 9:45 a.m. Eastern
There are many regional manufacturing surveys, and they tend to be ranked in order of timeliness and the importance of the region. The New York and Philadelphia Fed's surveys are the first each month followed by the Chicago purchasing managers' report on the last day of each month. A few, such as the Atlanta and Richmond Fed surveys, are released after the Institute for Supply Management and are thought to be of little value.
The purchasing managers' reports are measured like the national ISM -- 50% marks the breakeven line between an expanding and contracting manufacturing sector. For the New York, Philadelphia and Atlanta Fed indexes, 0 is the breakeven mark. These surveys can be of some help in forecasting the national ISM.
Highlights
* According to the Institute of Supply Management -- Chicago and Kingsbury International Ltd., the Chicago PMI dropped to 34.9 in May from 40.1 in April. That was well-below the consensus estimate of 42.0 and is indicative of a manufacturing sector in contraction, given the reading below the dividing line of 50.0.
* New orders fell to 37.3 from 42.1; order backlogs dipped to 26.3 from 36.9; inventories rose to 31.5 from 30.6; employment declined to 25.0 from 31.8; supplier deliveries fell to 43.0 from 45.4; prices paid increased to 29.8 from 28.4; and production held steady at 38.1.
* The full report is available at www.kingbiz.com
Key Factors
* In nearly every component index, readings went in the wrong direction for proponents of the recovery trade.
* Recent reports in this series have shown that the rate of decline in manufacturing activity in the Chicago area has been slowing; however, this May number reflects a re-acceleration in the rate of decline.
* This isn't an encouraging report, but it is also survey data, so it should have less impact than hard economic data.
Big Picture
* The Chicago PMI has little overall economic value, and is only watched by the financial markets because it is usually released one day in advance of the similar national ISM manufacturing survey. A significant move in this regional survey will therefore sometimes be seen as having predictive value for the ISM index.
WEDNESDAY, JULY 1
10 a.m. Institute for Supply Management
* 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 which covers such indicators as new orders, production, employment, inventories, delivery times, prices, 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 Institute for Supply Management's monthly Report on Business is probably the most widely watched economic indicator produced by the private sector. There are two key reasons for the ISM's prominence. First, its longevity -- the report was first produced in 1931, and after a break during World War II, it has produced continuously since 1948. Second, its leading quality -- the ISM has been one of the better predictors of the business cycle over the years.
Highlights
* The ISM Index for May didn't disappoint. It checked in at 42.8% versus 40.1% in April and the consensus estimate of 42.3%. The dividing line between expansion and contraction is 50.0%, so the May number still reflects a manufacturing sector in contraction, but at a pace that has slowed.
* Encouraging growth news was provided by the new orders component, which tipped into a growth mode at 51.1% versus 47.7% in April. This is the first month of growth in new orders since November 2007, according to the ISM.
* Production rose to 46.0% from 40.4%; employment held pretty steady at 34.3%; supplier deliveries increased to 49.8% from 44.9%; inventories fell to to 32.9% from 33.6%; prices paid jumped to 43.5% from 32.0%; backlog of orders rose to 48.0% from 40.5%; exports increased to 48.0% from 44.0%; and imports edged up to 42.5% from 42.0%.
Key Factors
* The overall number edged above 41.0%. Research from RBC Capital Markets noted that a rise above 41.0% on the ISM has preceded positive GDP growth within one quarter 89% of the time and within two quarters 100% of the time since 1948.
* The component indexes within the national ISM Index moved in a manner that was opposite Friday's disappointing Chicago PMI report, which is to say the ISM components underpinned the recovery argument.
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.
THURSDAY, JULY 2
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 justifies this report's status as the most important economic release of the month. This same wealth of information can nevertheless turn into a dearth of knowledge if it is not placed in the proper context.
Given the wealth of data contained in the employment report, it is important to take all of these indicators into account when passing judgment on the report. Looking at payrolls along is often misleading, as the workweek, earnings and household employment measures may be telling a different story. Taken together, however, and taken with the caveats concerning monthly volatility and revisions, the employment report offers the best monthly glimpse of the economy.
Highlights
* "Only" 345,000 non-farm payroll jobs were lost during the month of May. That was indeed much better than the consensus estimate of -520,000. Moreover, the April nonfarm payrolls data was revised up to show a decline of 504,000 positions versus an originally reported -539,000.
* The other headline that jumps out is the unemployment rate, which spiked to 9.4% from 8.9% and is at its highest level since 1983. The big uptick is owed in part to an increase in the civilian labor force, meaning there were more people looking for jobs. That was read in counter-intuitive fashion, though, as a sign that it reflects increasing confidence in the economic recovery.
* Hourly earnings increased 0.1% as expected, yet the average workweek dipped to 33.1 hours from 33.2 hours, which isn't a great portent for a pickup in hiring. By the same token, the -0.2% decline in the manufacturing workweek isn't a great portent for a pickup in industrial production.
* By sector, job losses were seen in every category with the exception of education and health services ( 44,000) and leisure and hospitality ( 3,000). The manufacturing sector saw 156,000 job losses in May.
Key Factors
* The market's initial reaction to the May data was positive, which isn't surprising since traders typically react to cursory headlines. This report, however, doesn't contain good economic news.
* From the drop in the workweek, which suggests hiring isn't likely to pick up soon, to the unemployment rate, which left the 2009 average rate at 8.48% (and above the 8.1% average factored in the White House deficit projection for FY '09), to the increased rates of long-term unemployment and increased rates of underemployment, the May report doesn't set a good stage for a meaningful pickup in consumer spending.
Big Picture
* Employment conditions have worsened significantly in recent months. Through August 2008, payroll declines were moderate, and not at recessionary levels. The September and October declines were much larger and established a new trend. Employment conditions are not likely to improve for quite a few months, particularly as employment picks up only after an increase in overall demand.
