Insiders Buying Amid the Freefall (DIS, RL, NUAN, MOTR, AG, BGMD)
Stocks once again found themselves in freefall today. Ironically, though, company insiders are buying at the fastest clip since the market bottom of March 2009. According to our sister site InsiderScore.com, which provides insider buying and selling data and analytics to institutional investors, there is aggressive insider buying across all market cap and sector groups, while insider selling levels are lower than normal. Sentiment is strongest in the Healthcare, Consumer Discretionary, and Financial sectors. While insider buying doesn’t always signal a bottom – there were a lot of insider buys in November 2008, which proved to be a false bottom – this is a very bullish signal in our opinion for investors willing to look past the volatility and market action and instead look at valuations and the fundamentals. The people who know their companies and industries the best are buying, and investors should take their lead. According to InsiderScore, this is the first industry buy inflection for the entire market, excluding Financials, since August 2010, when there was a market correction around similar levels. The market rallied approximately 25% over the next four months.
The Canadian Mining Stocks Index was the top performing tickerspy Index on the day, led by First Majestic Silver (AG) with a 9% gain. The Medical Labs and Diagnostic Services Stocks Index was the day’s worst performing tickerspy Index, with BG Medicine (BGMD) down -36%.
Stocks tumbled on the day, led lower by the Dow’s -520 point, or -4.6% decline, to 10,720. The S&P plunged -52 points to 1,121, while the Nasdaq nosedived -101 points to close at 2,381. Oil jumped $3.59 to $82.89 a barrel, while gold added $1.30 to $1,784.30 an ounce.
In economic news, the Commerce Department said wholesale inventories rose 0.6% in June, good for the 18th straight month of gains. Sales jumped 0.6% following a -0.3% decline in May.
Shares of media and entertainment company Walt Disney (DIS) slumped -9.1% despite fiscal third-quarter results from the company that beat Wall Street estimates. For the quarter, California-based Disney earned $1.48 billion, or 77 cents per share, compared with $1.33 billion, or 67 cents per share, a year earlier. Revenue climbed 7% to $10.7 billion. On an adjusted basis, Disney earned 78 cents. Analysts were expecting a profit of 73 cents a share on revenue of $10.4 billion. Excluding $228 million in ESPN distributors fees that fell into Q3 instead on Q4 as expected, however, the results would have missed estimates by a penny. Nearly 90 pros held Disney in their portfolios at the end of Q1 and nearly 1,000 tickerspy members own the stock in their portfolios.
Shares of apparel maker Polo Ralph Lauren (RL) jumped 4.5% after the company said its fiscal first-quarter profit soared 52%. For the quarter, Polo Ralph Lauren earned $184.1 million, or $1.90 per share, up from $120.8 million, or $1.21 per share, a year earlier. Revenue jumped 33% to $1.53 billion. Analysts were expecting a profit of $1.44 on sales of $1.41 billion. For the fiscal second quarter, the company expects revenue to increase at a high-teens-to-low 20 percent clip. Analysts were forecasting $1.76 billion in sales. For the full year, Polo Ralph Lauren is forecasting a revenue increase in the mid- to high-teens, which is above the previous forecast of a mid-teens increase. Analysts were expecting sales of $6.53 billion. Eleven pros counted Polo Ralph Lauren among their top holdings at the end of Q1 and more than 130 tickerspy members own the stock in their portfolios.
Nuance Communications (NUAN), the maker of speech recognition software, said it posted a fiscal third-quarter profit of $41.6 million, or 13 cents per share, compared with a loss of -$1.5 million, or a -1 cent per share, a year earlier. Revenue jumped 20% to $328.9 million. On an adjusted basis, Nuance earned 35 cents a share. Analysts were expecting a profit of 34 cents on revenue of $334.8 million. Shares of Nuance inched up 0.2%.
Shares of Motricity (MOTR), the provider of mobile billing and data solutions, tumbled -59.1% after the company reported second-quarter results that fell short of Wall Street estimates and provided third-quarter guidance that also missed analyst estimates. The company reported a second-quarter loss of -$4.3 million, or -9 cents a share, compared with a loss of -$11.6 million, or -$1.95 a share, a year earlier. Revenue rose 14% to $34.6 million. On an adjusted basis, Motricity earned 4 cents a share, but analysts were expecting a profit of 9 cents on revenue of $37.1 million. For the third quarter, Motricity expects an adjusted loss of -$4 million on revenue of $31.5-$32.5 million. Analysts were expecting revenue of $45.5 million.
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