Insider Activity Surging During Coronavirus Hysteria

Insider Activity Surging During Coronavirus Hysteria

Insider Activity Surging

Insiders have been using this massive pullback to purchase shares, and one way to measure the intensity of their buying is to check the sell-to-buy ratio. Any reading of 2.00 is considered normal, and below 0.90 is considered as exceptionally bullish. So what do you think the current ratio is; well, it’s at a mind-numbing 0.35, which means these guys are backing up the truck and purchasing shares.

Today’s market readings indicate a significant level of insider buying activity. Vickers’ benchmark NYSE/ASE One-Week Sell/Buy Ratio stands at 0.33, suggesting a higher inclination towards buying rather than selling. Furthermore, the Total one-week reading is 0.35, indicating a similar trend. This surge in insider buying is noteworthy as it resembles previous instances such as late December 2018, early 2016, and late 2008/early 2009, which were opportune times to purchase stocks. Insiders’ behaviour in those periods suggests that they perceive today’s market as offering a comparable investment opportunity.

Massive Insider buys

These guys might not have a pulse on the economy, but they have the inner workings of their companies like the back of their hands. We have yet another powerful indicator that this massive pullback is a once in a generational buying opportunity.

And as of cue, the Fed has decided to add even more liquidity by opening its commercial paper funding facility. In essence, this section provides unsecured loans to businesses.

On Tuesday, the Federal Reserve announced its plans to launch a commercial paper funding facility aimed at providing support to companies facing financial difficulties due to the coronavirus outbreak. The facility will specifically assist in the rollover of commercial paper, which refers to short-term, unsecured debt used by companies to raise funds.

Due to business closures and restricted consumer activity resulting from quarantine measures nationwide, concerns have risen regarding companies’ ability to secure funding and survive during this public health crisis. The commercial paper funding facility will create a special purpose vehicle (SPV) to purchase unsecured and asset-backed commercial paper from eligible companies to address this issue. The purchased commercial paper must be rated A1/P1 as of March 17. Importantly, this facility will be accessible to companies across various industries, not limited to banks.

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