Executives across U.S. companies have been buying up their own stock faster than they have in six months, stepping in hard as the market took a beating. Over the past month, buying by corporate leadership has reached its highest point since May, right as the S&P 500 slid into its worst run since April.
The buying rush came as fear over an AI-related selloff triggered a broader move out of expensive tech names. As others dumped shares, executives were loading up.
Bloomberg says the ratio of buying to selling hit 0.5, meaning half as many executives were buying as those selling, a huge increase by historical standards.
This uptick in activity stood out as other investors hesitated during a five-day losing streak that wiped out most intraday gains and dragged the S&P 500 down 3.1% in a week.
Nvidia forecast triggers rebound as execs double down
By Thursday, some of those bets were already looking smart. The S&P 500 futures jumped 1.3% after Nvidia gave a strong sales forecast that helped ease panic around a possible AI collapse.
Executives had started buying before that bounce, even as most retail and institutional investors were still on the sidelines. They were acting while the rest were waiting.
Jay Hatfield, who runs Infrastructure Capital Advisors, said, “They’re putting their money where their mouth is. They’re not day trading. They’re long-term investors taking advantage of the pullback.”
Jay also revealed he boosted his own holdings in companies where top brass were buying, including Marvell Technology, which had just dropped following soft forward guidance. “I had more buy orders into the stock Wednesday morning,” he said.
This isn’t the first time the timing lined up. Back in April, just after Donald Trump, now back in the White House, rolled out sweeping tariffs, executives also jumped into their own shares. That wave of buying came just before the market staged its biggest one-day rally in decades, then kept climbing through the end of the second quarter. Activity later died down as the market moved to fresh highs. But now, the buying is back.
JPMorgan called the S&P 500’s dip a “technical washout,” arguing it’s an opportunity to add to positions. By Wednesday, the index was up 0.4%, snapping a four-day skid. Even with that gain, it’s still down 2.9% in November, tracking for its worst November since 2008.
Earnings strength boosts confidence in company outlooks
Part of what’s giving executives confidence is earnings. Corporate profits from the third quarter largely came in ahead of Wall Street’s expectations.
Matt Lloyd from Advisors Asset Management said profits were “running at their highest levels.”
That’s helping convince buyers that the companies they run are still worth betting on, even with volatility on the screen.
Brian Jacobsen, chief economic strategist at Annex Wealth Management, said, “Insiders are in a pretty good seat to assess the outlook for a company.
Insiders can look at their company through rose-tinted glasses, but net insider purchases can be a bullish signal.”
Chris Zaccarelli, who oversees investments at Northlight Asset Management, added that just because executives are confident in their companies doesn’t mean they can time the overall market.
“They don’t necessarily know the stock market extremely well,” he said. “There’s lots of reasons for insiders to sell, whether that’s diversification, or whether that’s in order to pay taxes or for cash flow needs, but there’s really only one reason an insider would ever buy their own stock, and that’s because they truly believe it’s undervalued.”
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Source: https://www.cryptopolitan.com/boards-and-c-suite-buying-their-own-stock/