Insider Buys and Sells: Weekly Update
Monday, November 23, 2009 | Tycoon StaffRating:
There is no better judge of a company's health and future prospects than the actions of owners and executives of publicly traded companies. That's why insider buying and selling is a critical piece of data for investors, both institutional and individual.
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 your Monday re-cap of the past week's activity of important insider buys and sells. For the most-timely data, be sure to read your Tycoon Report issues each morning!
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 your Monday re-cap of the past week's activity of important insider buys and sells. For the most-timely data, be sure to read your Tycoon Report issues each morning!
SELLS
Cognizant Technology Solutions Corp. (CTSH)
President and CEO Francisco Dsouza SOLD $6 million in shares and $1.9 million in options.
Vice Chairman Lakshmi Narayanan SOLD $2 million in options.
Danaher (DHR)
Executive Vice President James A. Lico SOLD $2 million in options.
EMC Corp. (EMC)
Director John R. Egan SOLD $3.5 million in shares.
EMCOR Group (EME)
Chairman & CEO Frank T. MacInnis SOLD $1.5 million in options.
Gilead Sciences (GILD)
EVP, R&D and CSO Norbert W. Bischofberger SOLD $1.4 million in options.
Chairman & CEO John C. Martin SOLD $4.7 million in options.
Kellogg (K)
President and CEO A. D. David MacKay SOLD $13 million in options.
Lincare Holdings Inc. (LNCR)
CFO Paul G. Gabos SOLD $3.9 million in options.
President & COO Shawn S. Schabel SOLD $10.6 million in options.
Chairman & CEO John P. Byrnes SOLD $10.3 million in options.
Massey Energy Co. (MEE)
SVP & Chief Operating Officer John Christopher Adkins SOLD $3.6 million in options.
McDonald's (MCD)
President, McDonald's USA Donald Thompson SOLD $3.8 million in options.
President, McDonald's APMEA Timothy J. Fenton SOLD $1 million in options.
Pulte Homes (PHM)
Exec VP, Chief Fin Officer Roger A. Cregg SOLD $1.3 million in options.
ResMed Inc. (RMD)
Executive Chairman Peter C. Farrell SOLD $6 million in options and $1.4 million in shares.
COO, Europe Stein Jacobsen SOLD $2 million in shares.
Sigma-Aldrich Corp. (SIAL)
President, Supply Chain David Julien SOLD $2 million in options.
Larry M. Hummel SOLD $1.6 million in options.
Taubman Centers Inc. (TCO)
Senior VP, Chief Admin Officer Robert R. Reese SOLD $1 million in options.
Vice Chairman and CFO Lisa A. Payne SOLD $1.7 million in options.
Urban Outfitters Inc. (URBN)
Chief Administrative Officer Freeman Zausner SOLD $1.6 million in options.
Wal-Mart Stores Inc. (WMT)
Chairman of Exec. Committee L. Lee Scott Jr. SOLD $13 million in shares.
Economic Calendar for the Week of Nov. 23-27
TUESDAY, NOV. 24
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 5 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 Consumer Confidence survey took a turn for the worst as confidence tumbled to 47.7 in October from 53.4 in September. The consensus expected confidence to rise modestly to 53.5.
* The weak recovery theory drove the present situation confidence index to its lowest level (20.7) since February 1983.
* The expectations indicator declined to 65.7 from 73.7.
Key Factors
* The drop in confidence shouldn't have been unexpected. The University of Michigan Consumer Sentiment index posted a similar decline in October as the preliminary reading declined to 69.4 from 73.5.
* In fact, the shock to the market should not have been that confidence was much lower than expected but that consensus had expected an increase in the first place.
* Consumer confidence numbers are highly correlated with gasoline prices, unemployment, the stock market, and media reports. Over the last month, gasoline prices have remained stable, unemployment reports look better as initial claims have declined, and the stock market has continued to rebound. These would point to an increase in confidence. However, the media has been harping constantly about the possibility of a weak economic recovery.
* It seems many people are beginning to believe the media. Workers are understanding that, while the economic situation in aggregate is increasing, they may be hard-pressed to see any of the benefits. Until many workers can experience some tangible benefit of the recovery, they may continue to believe that their situation is not getting better.
* However, the decrease in consumer confidence does not necessarily translate into decreased consumption spending. The main drivers for consumption growth are current/expected income and available credit. The consumer still faces difficult constraints in both sectors which makes future consumption growth difficult.
Big Picture
* Consumer sentiment indices get way too much attention. The simple fact is that sentiment does not correlate strongly 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.
WEDNESDAY, NOV. 25
8:30 a.m. Durable Goods Orders
* Importance (A-F): This release merits a B.
* Source: The Census Bureau of the Department of Commerce.
* Release Time: 8:30 a.m. Eastern around the 26th of the month (data for month prior).
* Raw Data Available At: http://www.census.gov/ftp/pub/indicator/www/m3/index.htm
The durable orders release measures the dollar volume of orders, shipments, and unfilled orders of durable goods (defined as goods whose intended lifespan is three years or more). Orders are considered a leading indicator of manufacturing activity, and the market often moves on this report despite the volatility and large revisions that make it a less-than-perfect indicator.
These problems can be minimized by looking at the breakdown of orders. The total number is often skewed by huge increases in aircraft and defense orders. An increase based solely on strength in one sector tends to be discounted, while the market is more impressed with broadbased increases in orders.
Highlights
* Durable goods orders rebounded in September as orders increased 1.0% compared with -2.6% growth in August. The growth in September was accurately predicted by the consensus.
* The end of the Cash for Clunkers stimulus plan has not resulted in the increase in motor vehicle orders that were expected. Motor vehicle orders declined 0.1%. Inventories at car dealers remain low and dealers are not willing to restock their lots as it seems unlikely that consumer demand will pick up through the rest of the year.
* Excluding transportation goods, orders increased 0.9%. The difference in the orders excluding transportation and the headline is due to the military stepping up its purchases of defense aircraft. Defense aircraft orders surged 12.5%.
* Manufacturers inventories remain low. Total inventories declined 1.0%. However, excluding transportation inventories declined only 0.5%.
* Capital good inventories declined 1.7%, but the decline was mainly due to a drop in inventories of nondefense (-3.1%) and defense (-2.9%) aircraft and parts.
* Inventories of nondefense capital goods excluding aircraft declined only 0.7%.
* Total durable good shipments increased 0.8%, but almost all of the increase was in the transportation sector as shipments excluding transportation fell 0.8%.
Key Factors
* While the headline data suggests strong growth, most of the increase was in the defense sector. Durable goods orders excluding defense rose a more modest 0.5% but is still well above the -2.6% witnessed in August.
* Business investment growth took off in September and followed many firms' statements regarding new initiatives to take advantage of low interest rates and higher return on capital potential. Orders for nondefense capital goods excluding aircraft surged 2.0% after declining 0.8% in August.
* While the increase in business investment was expected by the consensus, given the continued volatility in the investment sector, the market will find it reassuring that expenditures were on track.
* Interestingly, computer purchases posted modest gains in September. It was thought that consumers and firms would hold off on purchasing new computers until after the October release of Windows 7.
Big Picture
* Durable goods orders trends were very weak in late 2008 and early 2009. That reflected a collapse of confidence in the business sector and poor credit market conditions. The rate of decline has eased and there has been some intermittent increases of late that suggest the worst of the downturn is over. Still, the business investment outlook can be considered weak.
9:55 a.m. University of Michigan Consumer Sentiment Index
* Importance (A-F): This release merits a B-.
* Source: The University of Michigan.
* Release Time: Preliminary: 10 a.m. Eastern on the second Friday of the month (data for current month); Final: 10 a.m. Eastern on the fourth Friday of the month (data for current month).
The Michigan index is almost identical to the Conference Board Consumer Confidence index, though there are two monthly releases, a preliminary and final reading. Like the Conference Board index, it has two subindexes -- expectations and current conditions. The expectations index is a component of the Conference Board's Leading Indicators index.
Highlights
* The University of Michigan Consumer Sentiment Index plunged from 70.6 in October to a preliminary reading of 66.0 in November. The consensus expected consumer sentiment to have increased to 71.0.
* Details of the sentiment number don't look promising. The current economic conditions index fell from 73.7 to 69.6. The economic outlook index declined from 68.6 to 63.7.
Key Factors
* The drop in sentiment shouldn't have been too unexpected. Sentiment is highly correlated with media reports, gasoline prices, and unemployment.
* The shock to consumers that the unemployment rate broke above the 10.0% threshold for the first time since the early 1980s clearly had a much more profound effect on consumer psyche than the positive news reports about the third-quarter GDP numbers.
* While most economists understood the unemployment rate was going to pass through 10% for months now, the sentiment numbers indicate that the consumer had not fully understood or chose not to believe that a 10% reading was coming.
* Unemployment is expected to slowly creep up over the next few months as the economy goes through a jobless recovery. However, a future increase in the unemployment rate does not guarantee a further decline in the sentiment reading as long as consumers believe the employment situation is getting better. Initial claims reports have trended down over the past two weeks and a further drift over the month may help mitigate the unemployment shock and push up the final November sentiment reading.
* Please note, even though the sentiment indicator unexpectedly plummeted, a drop in sentiment does not necessarily translate into lower consumer spending. The main drivers for consumption are current/expected income and available credit. The consumer still faces constraints in both sectors, which will make future consumption growth difficult.
Big Picture
* Sentiment readings are a reflection of a variety of events rather than an accurate tool for forecasting consumer spending. Gas prices and political events can have an outsized impact on sentiment. In general, these data are of very little economic value.
Source: Briefing.com
