Amid a maelstrom of news on the fiscal cliff, Greece, the Israel-Hamas cease-fire — and even the holiday shopping season — you might have missed it.
There has been a surge in large insider stock purchases by corporate officers during the Dow’s 1,000-point selloff across the Oct. 15-Nov. 21 time frame. Below is just a small sampling of some of the recent activity:
- Kansas City Southern (NYSE:KSU): Director bought 67,300 shares at $72.94-$74.80 on Nov. 16, worth ~$11.5 million.
- Janus Capital (NYSE:JNS): Dai Ichi Life Insurance bought 1.87 million shares at $8.36 on Nov. 21, worth $9.09 million.
- Navistar International (NYSE:NAV): Director bought 127,000 shares at $19.65 on Nov. 20, worth $2.49 million.
- AGCO (NYSE:AGCO): Director bought 67,576 shares at $44.47 on Nov. 19, worth $3.05 million.
- Apple (NASDAQ:AAPL): Director bought 1,780 shares at $563 on Nov. 19, worth $1.01 million.
- JCPenney (NYSE:JCP): Director bought 126,000 shares at $15.98 on Nov. 16, worth $2.01 million.
- Corning (NYSE:GLW): Director bought 170,000 shares at $10.76 on Nov. 16, worth $1.87 million.
My point: Despite all that is going on in Europe, the Middle East and Capitol Hill, there is deep interest from the well-lined pockets of corporate insiders who will spend big dollars on stock purchases when the market provides deep discounts. It simply demonstrates how the super-wealthy think when the market panics: They’re buying.
It goes against the grain for most retail investors, though, which also is evidenced by the wave of emails I receive during market downturns. Most people simply don’t have the stomach for market volatility.
But it’s exactly this kind of behavior that we can all learn from: using broad market weakness as opportunity to acquire assets on sale for reasons that are totally unrelated to the underlying business model.
Bryan Perry is editor of Cash Machine, a newsletter focused on dividends and income investing. As of this writing, he did not own a position in any of the aforementioned securities.