Insider Buying Called Bullish Sign for 2000

U.S. executives and other corporate insiders are buying shares in their companies at the strongest pace in 11 months, even as the stock market’s major indexes approach record highs.

Directors, executives and big individual investors started buying shares when the market bottomed out in October. They’ve stepped up purchases even as the Dow Jones industrial average rebounded 11% in the last six weeks.

“There are extremely aggressive rates of buying,” said David Coleman, editor of the Vickers Weekly Insider Report, which tracks buying and selling. “I’m looking for the market to increase 20% in the next year.”

Typically, insiders sell shares more than twice as often as they buy. Yet during the last eight weeks, insiders have been purchasing shares an average of three times for every two sales, according to Vickers. Its eight-week ratio of sellers to buyers has fallen to the lowest level since last December.

“The insiders are giving us a green light,” said George Shirk, managing editor of the Insiders newsletter in Deerfield Beach, Fla.

While executives have many reasons to sell shares--they’re buying a house, diversifying investments or cashing out stocks they believe are near a peak--they usually buy because they consider their companies a good value, analysts said.

Historically, in the rare instances when buying has exceeded selling, stock prices have increased an average of 25% in the following 12 months, Coleman said.

Analysts say buying has been widespread in a range of industries.

Recent buyers have included executives and directors of real estate investment trusts Duke-Weeks Realty Corp., Keystone Property Trust and Host Marriott Corp.

Other buyers have been clustered among insurance, banking and home-building companies.

Officers and directors have also bought shares of auto parts retailers Pep Boys-Manny, Moe & Jack and AutoZone Inc., whose stocks have plunged since spring. And insiders have scooped up shares of coffee retailer Starbucks Corp. and upscale retailer Saks Inc., among others.

As usual, however, the sizzling Internet sector has not seen net insider buying.