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US stocks came under strong selling pressure on Thursday (3). Major stock indices fell sharply, marking the biggest drop in a day since June. The tech stocks that led the rise in US stocks in recent months have collectively plunged. However, some studies have shown that prior to this large-scale selloff, senior US companies successively released their holdings last month, setting a new record for the past five years.
Investigative and investigative agency Smart Insider recently conducted an investigation on data compiled by the Financial Times. The results show that in August, the highest level of US securities companies sold their shares. The highest level has been written since November 2015]. The number reached 1,042, the highest since August 2018.
Various signs show that since the US stock market hit a low in late March and after a historic rally, the company’s top executives are rapidly exiting their positions and taking notice, and the sell-offs internal have reappeared.
The behavior of corporate CEOs, CFOs, boards of directors, and other insiders who sell stocks is often viewed by investors as a measure because they know better about the company’s operations. When insiders start to sell stocks on a large scale, in addition to the operational prospects of the company in addition to the situation, it may also mean that the share price has deviated from intrinsic value.
The Financial Times noted that Steven Rales and Mitchell Rales, the founders of the American Danaher brothers, were the biggest sellers in the insider’s dump in August. They sold nearly $ 1 billion worth of Fortive shares. The first made a profit. 600 million US dollars, the latter made 360 million US dollars. Fortive was originally a Danaher Group company and was separated from the group in 2016.
From a historical perspective, in November 2015, when corporate experts sold billions of dollars in stocks, in 65 days, the S&P 500 Index plunged nearly 14% and hit a low in early 2016.
Max Gokhman, Head of Asset Allocation at Pacific Life Fund Advisors, said: “The CEO is even more pessimistic about the outlook for his company than investors. When he thinks the outlook for his company is bleak, but the share price it’s going up, it’s time to get out! “
However, Holly MacDonald, chief investment officer at Bessemer Trust, believes that yesterday’s sell-off means the market has returned to a more normal state to some extent, which is not surprising given the strong performance of the stock market in August.
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