Insiders Are Selling Refiners and Skipping Banks. What Should Investors Do?
Executives at refiners Par Pacific and PBF Energy are selling shares after gains of 149% and 210% this year. Meanwhile, the number of financial executives buying company stock fell to a near 23-year low.
Insider trades are public, yet they make a blunt guide. Ben Silverman, head of research at insider-data firm VerityData, says they suit single companies better than whole sectors.
Why Is Insider Selling Hitting Refiners at Record Highs?
VerityData’s chart compares how many insiders sell against how many buy, with 1.0 marking a sector’s long-run norm. Energy ranks second, at about 1.4 times its long-run average, against 1.2 for the overall market.
Par Pacific and PBF, both smaller oil refiners, trade at all-time highs, according to Wall Street Journal columnist Spencer Jakab. PBF’s adjusted second-quarter earnings swung to $6.22 per share from a year-earlier loss.
Diesel’s effective refinery price passed $200 per barrel last week, Jakab writes. The Group of Seven nations then agreed to release 100 million barrels from emergency stocks, including diesel.
Jakab doubts that diesel pricing can hold. He suggests executives with decades in refining see the limits better than investors do.
However, Jakab adds that insiders can be wrong about how investors feel toward their own industry.
Should Thin Insider Buying at Financials Worry Investors?
Financials top the chart at roughly 2.1 times their long-run average. Selling did not rise, VerityData found, so thinner buying drove the reading.
Goldman Sachs, Morgan Stanley and JPMorgan Chase report next week with Treasury yields above 5%. Per-share profits at each now stand near four times their level a decade ago, Jakab notes.
Still, Jakab flags strain in private credit (lending outside banks), stressed consumers and record borrowing by artificial intelligence (AI) firms.
In contrast, consumer staples sit lowest, at about half their long-run average. Insiders at Altria, Tyson Foods and energy drink maker Celsius Holdings recently bought shares.
Investors can read SEC Form 4 filings, which log insider trades publicly, such as the Nvidia insider selling filing. With the Nasdaq at a record, those tallies may show how far executives trust current valuations.
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