Insiders only buy their company's stock for one reason. To make money.
You probably know that insider trading is illegal. An insider is an individual who has access to confidential information about a company. This information can be used to gain an unfair advantage over others in making trading or investing decisions. For instance, suppose an insider knows that a company is about to announce earnings that are dramatically lower than Wall Street estimates. The insider could use this knowledge to profit. They could sell short the stock or buy puts before the release is made public.
The U.S. Securities and Exchange Commission (SEC) has implemented laws and regulations to prevent this type of activity. One of the things that an insider must do is to inform the SEC if they buy or sell their company’s stock. This is fortunate for us ‘outsiders’ because it could give insight into the future performance of the company.
Before I make an investment, I always check to see what the insiders are doing. I especially like to see if the insiders are buying after the stock price has dropped significantly.
There are numerous reasons why an insider may sell their stock. They may need to money to pay tuition or to buy a home. But there is only one reason why an insider would buy their company’s stock. That is because they believe that it will go higher and they will make money!
The following seven companies have seen their stock prices fall dramatically. Apparently, the insiders at these companies believe that these selloffs are coming to an end because they have been buying. For the full story visit investorplace.com.
