Insider Selling: Beware

A lot of investors ignore insider selling, that is selling of shares by directors. Of course sometimes directors will sell shares in their own companies but when the selling is significant I am always wary to invest. Afterall these are the people who know more about the business than any analysts do. If the directors don't have confidence in their own businesses then why should you? Insider selling can also be a good signal that not all is right in the company. Especially with companies that look cheap we have to be extra careful. If our valuation of the company makes it look a very attractive investment and the directors are running for the hills then there is a good chance that there is something wrong with the company that is not apparent in the fundamentals. If the company looks expensive by our valuation and the directors are selling then they might just be cashing in some chips and investing in something they see as giving higher returns (eg property).

Recently I posted a list of FTSE 100 individual stocks with their expected returns.

Using data from digitallook.com I have complied a table of the top 10 of the list (the best value shares) showing director buying and selling in the last 12 months together with the net buying or selling:

Share	Buying	Selling	Total
BT	£42,820	£5,220,072	-£5,177,252
Vodafone	£21,143	£2,630,559	-£2,609,416
Legal & General	£25,734	£2,233,156	-£2,207,422
RSA	£1,198	£2,059,133	-£2,057,935
Aviva	£246,018	£984,375	-£738,357
Scot & South Energy	£624	£196,742	-£196,118
BAE Systems	£594,138	£613,126	-£18,988
Resolution	£0	£0	£0
ICAP	£78,825	£49,613	£29,212
Standard Life	£193,258	£137,272	£55,986

I've ranked the shares in order of net selling.

Looking at the top 4 in the list they all have insider net selling of over GBP2m and in the case of BT over GBP5m has been offloaded. In these cases I'd be cautious.

For Aviva there is fairly significant net selling but their has also been fairly substantial buying over the last 12 months too.

For the other companies on the list the amounts are low enough to be insignificant. In the case of BAE Systems the selling took place at the beginning of the period and the buying back of shares is more recent. If you changed the time frame to the last 6 months there would be a fairly substantial amount of net buying.

FTSE 100: Individual Stocks (Updated)

Last month I compiled a list of the stocks in the FTSE 100 index ranked in order of expected returns based on our model. You can see last month's list here.

The list actually performed well. Investing in the top 5 (+6.0%) or top 10 (+2.9%) would have beaten the FTSE100 as a whole (+2.3%). Also investing in the bottom 5 (+1.8%) or bottom 10 (+0.8%) on the list would have lagged the market. The figures also ignore dividends (remember the average dividend yield on the top 10 is over 6% and on the bottom 10 is around 1% so this would make investing in the shares at the top of the list even more attractive).

The best performers in the top 10 last month were SL (+10%) and LGEN (+12%) the worst being RSL which dropped 6%. In the bottom 10 Randgold performed best gaining 11% and Aggreko was the worst with a fall of 8%. Shire was down 9% at one point but has recovered a bit over the last few days to be 4% down.

Below is the current list:

Last Month	Share	Price	Analyst growth	Current Yield	3yr yield	Growth	Adjustment	Total
1	Aviva	266	2.9%	10.3%	9.5%	1.2%	0.0%	10.61%
2	Vodafone	182	15.0%	7.6%	4.9%	6.0%	-0.6%	10.32%
3	RSA	106	2.9%	9.1%	8.2%	1.1%	0.0%	9.39%
6	Resolution	191	3.1%	11.1%	7.1%	1.3%	0.0%	8.35%
4	Standard Life	226	5.9%	6.8%	5.8%	2.4%	0.0%	8.11%
7	BAE	280	3.5%	7.2%	6.2%	1.4%	0.0%	7.63%
9	SSE	1379	4.5%	6.3%	5.4%	1.8%	-0.1%	7.19%
8	BT	206	13.8%	5.2%	3.7%	5.5%	-2.0%	7.16%
5	L&G	124	11.7%	6.4%	4.0%	4.7%	-1.5%	7.15%
10	ICAP	344	3.5%	6.8%	5.8%	1.4%	0.0%	7.15%
12	AstraZenica	2794	2.7%	6.8%	5.8%	1.1%	0.0%	6.91%
18	M&S	320	5.3%	5.9%	5.1%	2.1%	-0.4%	6.85%
11	Admiral	1152	15.0%	7.8%	3.3%	6.0%	-2.5%	6.77%
14	National Grid	665	2.3%	6.2%	5.7%	0.9%	0.0%	6.62%
15	Centrica	315	6.4%	5.5%	4.5%	2.6%	-1.0%	6.06%
13	HSBC	571	8.2%	5.4%	4.1%	3.3%	-1.4%	6.02%
54	Severn Trent	1623	7.3%	5.0%	4.3%	2.9%	-1.3%	5.91%
21	Morrisons	265	11.0%	5.0%	3.6%	4.4%	-2.1%	5.88%
16	GSK	1479	6.4%	5.4%	4.4%	2.5%	-1.1%	5.87%
19	British Land	508	2.7%	5.4%	5.1%	1.1%	-0.4%	5.87%
22	Tesco	310	5.5%	5.3%	4.5%	2.2%	-0.9%	5.80%
17	Aberdeen	256	15.0%	5.0%	2.9%	6.0%	-3.2%	5.66%
20	RDShell 'B'	2185	3.1%	5.2%	4.9%	1.3%	-0.6%	5.60%
25	Sainsbury's	295	2.0%	5.7%	5.1%	0.8%	-0.3%	5.57%
24	Imp Tobacco	2440	10.4%	4.8%	3.4%	4.2%	-2.3%	5.31%
26	Reed Elsevier	496	6.0%	4.9%	4.2%	2.4%	-1.4%	5.23%
23	BritAm Tobacco	3231	9.6%	4.7%	3.5%	3.9%	-2.2%	5.14%
27	Ashmore	335	7.1%	5.0%	3.9%	2.8%	-1.7%	5.10%
40	WPP	755	14.4%	4.3%	2.6%	5.8%	-3.8%	4.56%
28	United Utilities	662	0.8%	5.4%	4.8%	0.3%	-0.6%	4.56%
34	Stan Chartered	1369	9.1%	4.2%	3.3%	3.6%	-2.5%	4.40%
29	BHP Billiton	1738	8.9%	4.4%	3.3%	3.5%	-2.5%	4.34%
45	IMI	800	9.2%	4.5%	3.2%	3.7%	-2.6%	4.25%
33	Rexam	408	11.1%	4.4%	2.8%	4.4%	-3.3%	3.96%
30	CRH	1116	1.2%	4.6%	4.5%	0.5%	-1.0%	3.95%
42	Amec	965	12.4%	4.0%	2.6%	5.0%	-3.7%	3.84%
31	Old Mutual	150	11.8%	4.8%	2.7%	4.7%	-3.6%	3.83%
52	Tate & Lyle	636	4.6%	4.3%	3.7%	1.8%	-1.9%	3.69%
36	Barclays	196	13.3%	3.9%	2.4%	5.3%	-4.1%	3.59%
51	BSkyB	677	9.2%	4.1%	3.0%	3.7%	-3.0%	3.59%
39	Unilever	2104	15.0%	4.0%	2.2%	6.0%	-4.6%	3.57%
37	Land Sec	738	3.7%	4.2%	3.8%	1.5%	-1.8%	3.54%
49	Smiths	995	5.7%	4.1%	3.5%	2.3%	-2.2%	3.53%
44	Hammerson	432	4.4%	4.2%	3.7%	1.8%	-2.0%	3.53%
35	Capita	650	8.8%	3.9%	3.0%	3.5%	-3.0%	3.48%
48	Kingfisher	283	11.6%	3.9%	2.5%	4.6%	-3.8%	3.34%
38	Prudential	723	7.2%	4.0%	3.2%	2.9%	-2.7%	3.33%
41	Sage	271	7.4%	4.2%	3.1%	3.0%	-2.9%	3.17%
47	G4S	279	9.0%	3.6%	2.8%	3.6%	-3.3%	3.13%
63	J Matthey	2155	13.3%	3.3%	2.2%	5.3%	-4.6%	2.93%
43	Pearson	1233	6.3%	3.9%	3.1%	2.5%	-2.8%	2.92%
50	Next	3150	9.7%	3.4%	2.6%	3.9%	-3.7%	2.80%
64	Petrofac	1364	13.1%	3.5%	2.1%	5.2%	-4.6%	2.78%
55	Compass	657	10.1%	3.6%	2.5%	4.0%	-3.8%	2.77%
53	H Lansdown	511	15.0%	4.9%	1.9%	6.0%	-5.2%	2.64%
32	Vedanta	882	1.9%	4.1%	3.7%	0.8%	-2.0%	2.45%
61	R Benckiser	3366	2.7%	3.9%	3.4%	1.1%	-2.4%	2.04%
56	Diageo	1633	9.2%	2.9%	2.3%	3.7%	-4.2%	1.83%
58	SABMiller	2538	11.6%	2.9%	2.0%	4.6%	-4.9%	1.75%
60	Meggitt	373	7.7%	3.3%	2.5%	3.1%	-3.8%	1.74%
57	Rolls Royce	849	12.3%	2.6%	1.9%	4.9%	-5.2%	1.66%
59	Schroders	1298	5.0%	3.3%	2.7%	2.0%	-3.4%	1.32%
66	Burberry	1340	15.0%	2.6%	1.5%	6.0%	-6.4%	1.08%
70	Wier Group	1454	11.2%	2.8%	1.9%	4.5%	-5.3%	1.04%
62	Whitbread	2030	8.1%	3.0%	2.2%	3.3%	-4.5%	0.96%
67	Bunzl	1032	6.9%	2.9%	2.3%	2.8%	-4.3%	0.81%
71	Experian	899	9.7%	2.7%	2.0%	3.9%	-5.0%	0.81%
74	Xstrata	799	9.6%	3.8%	1.9%	3.8%	-5.1%	0.72%
69	Rio Tinto	2905	7.2%	3.7%	2.2%	2.9%	-4.5%	0.57%
65	ABF	1267	10.0%	2.4%	1.8%	4.0%	-5.4%	0.47%
72	Croda	2160	10.7%	3.1%	1.7%	4.3%	-5.6%	0.35%
68	IntCon Hotels	1530	7.4%	2.6%	2.0%	3.0%	-4.9%	0.06%
73	Intertek	2620	15.0%	1.8%	1.1%	6.0%	-7.7%	-0.58%
75	Int Power	418	1.3%	2.8%	2.4%	0.5%	-4.0%	-1.11%
77	Serco	527	9.2%	1.9%	1.4%	3.7%	-6.6%	-1.56%
76	Antofagasta	1047	15.0%	3.6%	0.9%	6.0%	-8.5%	-1.61%
78	Smith & N	619	5.8%	2.0%	1.6%	2.3%	-5.9%	-1.98%
79	Aggreko	1988	13.2%	1.3%	0.9%	5.3%	-8.8%	-2.62%
80	BG Group	1258	8.8%	1.4%	1.1%	3.5%	-7.7%	-3.12%
81	ARM	496	15.0%	1.0%	0.6%	6.0%	-10.6%	-3.96%
82	Tullow	1425	15.0%	0.8%	0.4%	6.0%	-12.8%	-6.40%
84	Shire	1818	11.1%	0.7%	0.5%	4.4%	-11.6%	-6.75%
83	Randgold	5691	15.0%	0.8%	0.3%	6.0%	-13.7%	-7.43%

Not many major changes, but share price movements and analyst forecast adjustments have moved a few companies up or down the rankings. Although there are no changes to the top or bottom 10 shares.

Noteable movements include Marks and Specners (MKS.L): Up 6 places to 12th, reduction in the growth rate forecast and a 8% fall in the share price. Severn Trent (SVT.L): Up 37 places to 17th, increase in the growth rate, 3 year average dividend increase and a 4.5% drop in the share price. A major faller is Vendata (VED.L) falling 24 places to 56th, lower growth rate forecast.

Note that this list is just based on raw data, before buying any of these stocks it's best to check dividend cover, technical price action, insider dealings, etc.