Auto Stocks Tumble on Insider Selling Fears

Investors in the Big Three auto makers are growing concerned that the peak in auto sales and profits might have passed, with shares of Chrysler, Ford, and General Motors suffering losses yesterday. The market reaction was sparked by a report of insider selling at Chrysler, with 13 vice presidents selling a combined 146,710 shares at prices ranging from $47 to $49 a share. Analysts, however, say the market reaction was extreme and that the industry's underlying fundamentals remain positive.

Key Takeaways:

• The report of insider selling at Chrysler was based on data compiled by CDA/Investnet, a company that tracks and analyzes trading activity of corporate insiders.
• The 13 Chrysler vice presidents who sold shares did so at prices between $47 and $49 a share, with a total of 146,710 shares sold.
• Analysts like Maryann N. Keller of Furman Selz and Jack V. Kirnan of Salomon Brothers defended the auto stocks, saying they were still buys despite the insider selling.
• Chrysler stock prices have dropped about 15 percent from their highs, with shares currently trading at around $48.
• The report added to concerns about auto stocks, which have been skittish in recent months due to rising interest rates and a slowdown in sales.

Statistics:

• Chrysler shares lost $1.50 a share, to $48.
• Ford shares lost $1.375, to $29.25.
• General Motors shares declined by $1.75, to $50.25 a share.
• 13 Chrysler vice presidents sold a combined 146,710 shares at prices ranging from $47 to $49 a share.
• Auto sales have slowed from their earlier breakneck pace, with showrooms fairly empty due to low inventory levels.

Sources:

• The Wall Street Journal
• CDA/Investnet ("a Fort Lauderdale, Fla., company that tracks and analyzes trading activity of corporate insiders")
• Datastream
• Furman Selz
• Salomon Brothers