Execs not fazed by terrorist attacks

If you follow such things, you were likely dismayed by reports that corporate executives flooded the Securities and Exchange Commission with Form 144 registrations in the wake of the Sept. 11 attacks.

Not only does this portray capitalism in the meanest light, it implies a lack of confidence in the very individuals responsible for getting our fragile economy back on its feet. The good news is that like so many tales spawned by terror, this one might turn out to be a bit tall for its own good.

Now granted, given the unprecedented break in trading and the inevitable pent-up demand that resulted, historical comparisons are difficult.

It doesn't seem unreasonable to approach the month's data in aggregate, however.

For the month, insiders and other early investors registered less than $3 billion worth of stock, the lowest total since December 1998. Of this total, $1.2 billion was registered in the six trading days prior to Sept. 11, while the remaining $1.6 billion was registered during the 10 trading days that followed. And keep in mind, not only does some portion of this latter value represent pent-up demand, but likewise shares sold under programs, including Rule 10b5-1 plans established under the SEC's Fair Disclosure Regulation (Reg. FD).

So, unlike an unfortunate minority itching to flee Capitol Hill for the heartland and mountains, the nation's executives apparently haven't given up the ghost.

In fact, preliminary numbers show that corporate insiders at long last started buying in September. So much so, in fact, that our preliminary ratio of sellers to buyers dipped below one-to-one for the first time since December 1999.

To be sure, the Feds provided some of the juice. Much was made of the SEC's decision to temporarily suspend restrictions on the timing and magnitude of corporate buybacks when trading resumed following the attacks.

Less widely known is that the same emergency order suspended the short-swing profit rule and thus allowed insiders who had sold within the past six-months to repurchase at lower prices and hang-on to their short-swing "profits."

And believe it or not, there's one other aspect to these numbers that's worth considering. For while the number of distinct individuals that hit the open market for shares increased markedly in September, this increase was curiously modest relative to the dollar value of the shares they purchased.

What gives?

An obvious culprit would be an increase in value in the underlying stocks. Wishful thinking: Despite a spirited reversal in the last week of the month, we've a ways to go before high stock prices are an issue.

Fortunately, the more likely explanation is every bit as appealing: Those insiders who did buy placed some pretty big bets.

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