Globe editors have posted this research report with permission of INK Research. This should not be construed as an endorsement of the report’s recommendations. For more on The Globe’s disclaimers please read here. The following is excerpted from the report:
As we head into the last month of the year, the key Canadian insider trends we are watching are the following:
1. Above average profit-taking in the Energy sector. The pickup in insider selling is particularly notable in the oil & gas exploration and production (E&P) group where our industry indicator sits at 190 per cent. At that level, there are 1.9 companies with key insider buying for every one with selling. That is down by more than half from its peak of just over 500 per cent back in June 2012 when the S&P/TSX Oil & Gas Exploration and Production Index was 13 per cent lower.
2. Mining insiders continue to bet on an industry recovery. Although our Basic Materials Indicator is down from its peak seen in May, it continues to hover around the 350-per-cent mark which is highly elevated. In addition, dollar selling levels are below average. The positive sentiment within the sector is being driven by the integrated and specialty mining areas.
3. Financial insiders are upbeat, but there are two distinct camps: asset gatherers and REITs. The asset gatherers such as brokers and banks have rallied on the back of a steepening yield curve. Insiders have been holding back from selling aggressively into the rally of asset gathering stocks sensing the chance of still more upside. In contrast, REITs have been struggling on the back of higher long term rates. Insiders have been buying suggesting that the REIT sell-off may be overdone.
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