Finance executives bought their own stock at the slowest pace in VerityData's records

Four buyers separate this quarter from the old record: 298 against 302, a gap of about 1.3% ^[16]. VerityData's sample covers more than 3,000 banks, asset managers and insurers ^[4], so 298 buyers is fewer than one purchasing insider for every ten companies ^[17].

Ben Silverman, VerityData's head of research, said the lack of buying suggests insiders are "skittish" about valuations ^[20]. "When equity prices get to a point that insiders feel that there's a price dislocation between where the market's perceiving a valuation, and where they believe it to be, they'll hold off on buying," he said ^[20]. "Like other investors, they're not trying to chase stocks and they're not trying to buy something they think is perhaps above fair value." ^[21]

Silverman's explanation is about the share price. It says nothing against the business. An executive can expect trading desks to keep setting records ^[12] and still refuse to pay today's price for that outcome. Selling, the other half of the data, is harder to interpret, because executives sell to cover taxes, to diversify or under prearranged plans ^[8]. Filings show JPMorgan executives routinely sell upwards of $800,000 of stock in a quarter ^[6], and a Goldman Sachs insider sold more than $600,000 a little over a month ago ^[7].

The two academics Fortune quoted disagree on whether the count means anything. Jesse Fried of Harvard Law School said fewer executive purchases can indicate "a bearish signal for that sector," because "inside purchases by executives tend to predict future market-beating returns for their firms" ^[19]. Nejat Seyhun of the University of Michigan's Ross School of Business disagreed. "I'm very skeptical that this means anything," he said. "When you look at how predictive insider trading is in the financial sector, it isn't predictive at all." ^[9] Bank shares move on monetary policy, interest rates and inflation, Seyhun argued, and "that's not the kind of information an executive can have" ^[10]. According to Fortune, the Fed raised rates around the time Oura and Bamboo Insurance delayed their offerings last month ^[13].

I think Silverman's account fits the evidence best. Executives who find prices high would produce a count like this one: four buyers under the 2024 low, in a quarter when insider buying fell across all stocks ^[5]. It tells you little about whether they expect record trading to end. The opposing case is the question Fortune raised, whether the people who know the business best doubt how long the run can last ^[15], and a stalled IPO market gives it some support ^[13]. Bank stocks have lagged the market recently ^[14]. On Silverman's logic, lower prices should bring insiders back. If the fourth-quarter count is still near 300 after this month's results, the doubt reading becomes the stronger one ^[1].