The Trump administration is pulling out all the stops to corral diesel prices as the midterm election looms. That includes pushing other countries to release stockpiles and deferring road taxes. Neither fuel prices nor a near quarter-century peak in Treasury yields are enough to cool investors' appetite for stocks, though. The Nasdaq composite hit a record high Monday and futures point to a fresh gains this morning.
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Money talks
When investors hear the words "insider trading," they think of profitable stock tips exchanged on a golf course or through some coded message: "Blue Horseshoe loves Anacott Steel."
But executives legally buy or sell tens of billions of dollars worth of their own companies' shares each year. Parsing that publicly available information can help us non-insiders too if we can guess why they did it. Sometimes it's an urge to take profits after an exceedingly strong run or snag a bargain when markets are too pessimistic.
Big Wall Street banks will unveil third-quarter results next week. (Goldman Sachs), (Morgan Stanley) and (JPMorgan Chase) have all more-or-less quadrupled their earnings per share in a decade and the broader KBW Nasdaq Bank Index hit a record high this summer.
Are investors too optimistic? The number of financial executives buying their own stock fell to the lowest in almost 23 years during the third quarter, according to Ben Silverman, head of research at VerityData. The number of sellers wasn't elevated. That still left the "Unique Seller/Buyer Ratio" his company tracks the highest of any sector relative to its long-term average during the period.
Banks' profitability measures, such as return on tangible common equity, are at their highest in years for some large institutions. But rising consumer stress, problems bubbling up in private credit and a record borrowing binge by AI companies are all concerns.
Another industry where executive trading has been lopsided is energy, recently boosted by rising oil prices stemming from the war with Iran. It's particularly pronounced among some smaller oil refiners, including Par Pacific and (PBF), where executives have been selling. Those companies' shares are up 149% and 210% this year through Monday, respectively, and at all-time highs.
Oil above $100 gets the headlines, but the effective price per barrel of diesel cranked out by refineries topped $200 last week before European countries agreed to release some stockpiles. That's unsustainable, and refining executives know it. While their share prices don't assume the profit bonanza can last forever, investors might be more optimistic about its staying power than people with decades of experience in the business.
Executive trading is far from a foolproof timing signal because they aren't always good judges of how excited or dejected Wall Street is about their sector. It's more useful in the case of individual companies, according to Silverman.
Some look enticing on that measure. The sector with the lowest ratio of sales to buys is consumer staples, at half of its long-run average. Consumer discretionary stocks are also subdued. Recent purchases from executives at (Altria), (Tyson Foods) and (Celsius Holdings) stand out.
Executives will never tell you outright when to buy or sell their stock. Sometimes their money talks for them.