MW Company insiders now are bearish to the extreme - but they're upbeat on these 11 stocks

By Mark Hulbert

Overall, executives and directors are down on 10 S&P 500 sectors - and positive about just this one

Insiders are negative about to neutral toward 10 of the S&P 500's industry sectors, and they're neutral to positive only toward utilities.

It was nice while it lasted. But the stock-market rally corporate insiders anticipated three months ago is most likely near an end.

That's because insiders have recently turned quite bearish. In early April, in contrast, they were bullish - meaning, as I wrote at the time, they "expect their companies' shares to recover soon from any first-quarter losses, so ... it makes sense not only to hold on to what they already own, but also to buy more."

The S&P 500's SPX total return is 10.5% higher today than where it stood when that early-April column was published.

As you can see from the chart below, insiders today are more bearish than at any time in at least a decade. The chart is based on data compiled by InsiderSentiment.com, which is maintained by Nejat Seyhun, a finance professor at the University of Michigan and a leading expert on interpreting the behavior of company insiders, and his son Jon Seyhun.

Note that the chart focuses only on transactions undertaken by corporate officers and directors, ignoring purchases or sales executed by the third group of investors that the law recognizes as insiders - a company's largest shareholders. That's because Professor Seyhun has found from his research that, on average, the transactions of this third group do not beat the market.

To distill insiders' transactions into a single number, the Seyhuns calculate the percentage of companies for which officers and directors are buying more shares than they are selling. For the month through July 16, this percentage stands at 11.1%, which the Seyhuns call "deeply negative." This reading means that, of companies that have experienced any recent insider transactions, in nearly 90% there's been more selling than buying.

Insider selling is not confined to one or two corners of the market, furthermore. The Seyhuns report that, of the stock market's 11 primary sectors, "insiders are negative to neutral in 10 sectors, while they are neutral to positive in Utilities only." Furthermore, "insiders are negative on small firms, mid-cap firms, and large-cap firms."

Insiders still have these favorites

Widespread as insider pessimism extends, however, there are a handful of companies whose insiders are buying more than they are selling. These companies are worth considering if you want to remain invested in equities despite the insiders' overall bearishness.

I presented a list of insider-favored stocks in my early-April column. Since then they have produced an average gain through July 16 of 50.9%, versus 10.5% for the S&P 500's Total Return Index.

The list below contains the largest-cap company within each of the S&P 500's 11 primary industry sectors that has experienced the greatest net-insider buying over the last month. Among these 11 stocks are ConocoPhillips (COP), Caterpillar $(CAT.AU)$, UnitedHealth Group (UNH), GameStop (GME), Clorox $(CLX.UK)$, U.S. Bancorp (USB )and Simon Property Group $(SPG)$.

Mark Hulbert is a regular contributor to MarketWatch. His Hulbert Ratings tracks investment newsletters that pay a flat fee to be audited. He can be reached at mark@hulbertratings.com

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-Mark Hulbert

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July 18, 2025 13:02 ET (17:02 GMT)

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