Institutional investors will tell you that one of the more accurate predictors of a stock that is ready to rise is large share purchases by company executives and other insiders. Unlike individuals who engage in insider trading, which is done without public disclosure and/or knowledge, insider buyers are required to file any share purchases (amount and share price) of their company stock with the SEC. This makes the trade part of the public information that is available to every investor. Insider buying has a different significance than insider selling. Like all of us, company executives have lives and expenses. This means there can be many reasons for a company insider to sell a stock.
However, it’s a different matter when an insider buys shares of their company’s stock. The only reason for an insider to buy their company’s stock is simple – they expect the stock to increase in value. Insider buying tends to occur when the company’s stock has gone through a sharp correction. As you consider positions to enter going into the second quarter earnings season, take time to review this presentation for seven stocks that are showing heavy signs of insider buying.