Ratio of Insider Buying to Insider Selling Drops to New Low in January

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After a year of economic decline, the first month of 2023 produced the lowest ratio of companies with insider buying to companies with insider selling since October 2021. Last month, insiders purchased at 193 companies and sold at 617 companies, dropping the monthly ratio of companies with buying to companies with selling to 0.31 in January (see graph below), just a fraction above the October 2021 ratio of 0.29. The ratio of insiders buying to insiders selling also slid in January, tumbling to 0.32 (345 insiders buying to 1,072 insiders selling).

Although January is typically a slower month for insider transactions, due to earnings announcement-related trading prohibitions, it is still worth noting the lack of buying at companies last month. While the ratio itself has been lower in the past, the 193 companies purchased in January is the lowest in the history of our data, spanning back to 1988. This lack of buying does emphasize, beyond the expected slowdown that comes with the season, that insiders are less active due to uncertainty in the markets. Given the low-point in both the companies purchased and the overall ratio, it may be assumed that the general sentiment of insiders is to cautiously wait on the market's long-term movement.

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The Washington Service Research Team