This begs the question for fundamental style investors – if the people who run the company wont buy it why should you?
Few top executives followed Jamie Dimon’s example this year in buying company stock.
Insiders at a majority of S&P 500 Index companies didn’t purchase any of their firm’s shares in the open market this year, according to data compiled by Bloomberg, a far cry from the $26.6 million Dimon shelled out for JPMorgan Chase & Co. equity.
Most corporate executives and directors steered clear as U.S. stocks became increasingly expensive. A rally since the presidential election has lifted equity indexes to records and the S&P 500’s price-to-earnings ratio to a seven-year high.
Another consideration that probably matters more than share prices: Top bosses at U.S. companies typically don’t need to buy stock because they acquire considerable ownership by receiving the bulk of their multimillion-dollar pay packages in stock.
“If you work at a butcher and a significant benefit of the job is that you get to take home several steaks every week, why would you want to buy more steak?” said Ian Levin, a partner at Schulte Roth & Zabel focused on executive compensation.
More here – Bloomberg