You can only speculate why an insider purchases significant amounts of their own stocks. Of course they expect to make money. That’s a given. But buying stock in your own company is a hazardous process to start with due to something known as the “short swing rule”. Quoting from Wikipidia,
A short swing rule restricts officers and insiders of a company from making short-term profits at the expense of the firm. It part of United States federal securities law, and is a prophylactic measure intended to guard against so-called insider trading.[1] The rule mandates that if an officer, director, or any shareholder holding more than 10% of outstanding shares of a publicly traded company makes a profit on a transaction with respect to the company’s stock during a given six month period, that officer, director, or shareholder must pay the difference back to the company.[2]
Wow. That pretty much rules out a lot of would be investors. You have to be mighty darn sure of yourself and the Company to make these kinds of long range and financially punishing commitments. So in that vein, I look pretty seriously at what insiders are doing. Here are a list of stocks with massive insider buying. Can you figure out what they see? I pulled this article by Roberto Pedone from the Street. com. By the way there was some insider buying that stock as well jus the other day. I can’t see buying into a $2 street.com stock, though. If they can’t make it better than a $2 stock with the ubiquitous Jim Cramer plugging it every day, then what hope do you have? At any rate this is a good article about some of the stock with the biggest insider buying recently.