If These People Aren't Buying, Why Are You?

I’m coming in a little late in the day. I’ve been writing my next issue of Postcards from the Edge of the World, more or less, through the afternoon. So my goal of a 'Chart Party' has turned into an analysis of one chart.

In recent weeks, technology stocks have been under pressure due to ongoing concerns about the impact of AI on brokerages, software-as-a-service (SaaS), law firms, and other industries it might disrupt. Two weeks ago, Goldman’s trade desk called the bottom on that trade -- for a hot minute.

Then, JPMorgan came out this week with a dedicated research basket of stocks they called “Top Mispriced Stocks Amid AI Disintermediation”.

In this chart, the analysts say that prices have out-shot fundamentals. This is a big list. Where does someone even start with this list of stocks?

Thanks, I suppose.

Two Things

I want to stress something important. They’re saying that prices have outstripped fundamentals. You know what they didn’t mention?

The refinancing challenges on the horizon for the U.S. economy. About $9.6 trillion in U.S. debt will mature in the next 12 months -- all at the same time that loads of corporate debt will need to be refinanced.

So, U.S. debt (barring some serious monetary expansion) could easily crowd out capital on that technology side, especially the software names.

But you know what? Forget all my analysis on liquidity. And let’s take a look at the thing that I spend more time on during my day than anything else: Insider buying.

A few years ago, I ran a big analysis of the stocks Cathie Wood kept buying in the face of the 2022 downturn. And what I saw was a little interesting. There were billions of dollars in stock sales in the Top 10 holdings, but only one purchase of stock via a direct Form 4 filing over the previous years.

The thing I had to ask: If the stocks were cheap and the fundamentals were so overshot, why would Cathie Wood buy a stock if the executives weren’t doing it? Yes, they are compensated in stock, but we’re being told by JPMorgan that these stocks are overshooting fundamentals.

I would be way more content to hear this from the Chief Financial Officer or the Chief Executive Officer. No one knows the balance sheet and the valuation better than the CFO. No one should know the macro- and micro-worlds better than the CEO.

So, I went back and just looked at this list through the lens of insider buying. These are the only names on the list that have seen any insider buys in the last three months.

Now, one more addition. Let’s screen for CEO and CFO purchases only:

• CH Robinson (2/13) - CFO buy for $100,000 and CEO for about $200,000 (plus two more officials).

• Warner Music Group (12/12/25) - CFO buy for $1 million.

• MSCI (2/13) - CEO buy of $3.5 million by Chairman.

That's it. I don’t argue about the fundamentals, but there were times when some of us thought PayPal was cheap at $150 in 2021, at the height of the liquidity cycle. We just passed the top of that cycle -- for now.

I’m just asking the same question as I always do when it comes to this: If the CEO and CFO aren’t buying their stock while it’s “so cheap,” then why are you?