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May was yet another month in a long trend of volatility and drawdowns for markets, but as prices dipped, corporate executives bought into their own companies at unprecedented rates, reported Financial Times.
Insider buying in May through May 24 was the strongest it had been since the buying opportunities presented by the March 2020 COVID-19 price plummets in markets. Within the Russell 2000 there were more insider buyers than sellers in May for the first time since March 2020, according to VerityData.
This trend defies broader investor expectations, with words such as stagflation and recession bandied about on a regular basis.
“Corporate insiders are holding a non-consensus view across most sectors and [are] actively buying the dip,” said JPMorgan analysts in a note on May 27.
Executives strongly buying into their own companies has historically been a positive indicator of a market hitting bottom, explained David Giroux, portfolio manager at T. Rowe Price.
“Insiders are saying ‘we don’t see a massive event coming’… these are really good buying opportunities,” Giroux said. “This is just another confirming data point that should be positive for the market over six to 12 months if not longer.”
Investing in Dividend-Yielding Companies With KVLE
Increasing interest rates are driving advisors and investors to consider alternative sources of income as bond allocations continue to experience outflows. One place that advisors are turning to in order to seek income is within dividends and dividend-yielding companies.
The KFA Value Line Dynamic Core Equity Index ETF (KVLE) follows a strategy of investing in higher-yield companies while diversifying in a way that a “theme” portfolio does not. The fund is a core equity portfolio of securities that are tilted to favor dividend yield, and it seeks to increase yield while avoiding investing solely in high-yield sectors and stocks.
KVLE is benchmarked to the 3D/L Value Line Dynamic Core Equity Index and utilizes optimization technology to emphasize securities with solid dividend yields that have the highest rankings in both Value Line Safety and Timeliness. The fund uses a smart beta strategy in seeking more cost-efficient alpha as well as a risk-management strategy that seeks to limit the effects of major market declines while also being positioned to capture positive returns.
KVLE carries an expense ratio of 0.55%.
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