Retail chains on stock buy-back spree

Shoppers carry packages in Chicago.

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KAI RYSSDAL: There are two things of note to start us off on this Monday. Items that might help you put both the economy and the holidays into a little bit of context.

First of all, when was the last time you heard this phrase? Mergers and aquisitions? Yeah, it's been a while. Deals have been scarce in this time of tight credit. But there were some slight glimmers of hope this morning on that front. The biggest of the bunch was Ingersoll Rand. It's going to buy the air conditioning company Trane in a deal that comes in at just over $10 billion. Not a staggering sum. But big enough to raise hopes that better days are ahead.

Item number two. Retail shoppers. With only seven shopping days left until you-know-what. Sales aren't living up to expectations. And they weren't even expected to be that good. Retail management, however, is on a buying spree. Marketplace's Dan Grech has more.


DAN GRECH: Executives at retail firms like The Limited, Footlocker and Dillard's are snatching up their own company's shares. Since November, they've increased their collective stake by $350 million.

BEN SILVERMAN: This is very unusual, based on recent history, that insiders would be pouring this much money in this sector.

That's Ben Silverman with InsiderScore, a firm that tracks executive transactions. Retail stocks have taken a beating this year. The industry is heading for its biggest decline in five years. So what do retail executives know that we don't?

SILVERMAN: Perhaps they feel that the retail sector is not as bad as the doomsayers believe it is. Insiders in retail and typically across the stock universe have been very good at calling lows.

The last four times retail insiders added to their holdings, stock prices rebounded by 10 percent in the next three months. So, many retail analysts see insider activity as a good sign. Not investment banker Howard Davidowitz.

HOWARD DAVIDOWITZ: I think the worst is yet to come, not only on Main Street but on Wall Street. We're going into a recession next year, led by the devastation of the American consumer, which we see in the current retail numbers.

Davidowitz says executives, by their nature, are bullish on their own stocks, which he predicts will continue to get hammered.

I'm Dan Grech for Marketplace.

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