One of my favorite clients sent me this article. This is something we have known to be true for a long time of course as we are the”insider’s fund”. What is conspicuously absent from the reporters’s story is the revelation of the “short swing rule”. This is the game changer and what makes insider buying such a timely indicator.
Insiders Can Give an Edge
By FRANCESCO GUERRERA CONNECT
Nov. 18, 2013 3:04 p.m. ET
Michael Babich seems like the right kind of insider trader—the legal kind.
In mid-August, Mr. Babich, chief executive of the pharmaceutical company Insys Therapeutics Inc., INSY -1.37% spent about $25,000 to buy 1,000 shares of the Nasdaq-listed company.
“It was a day I felt I needed to show my confidence in my company,” he told me. “There was no news and no events. I saw value.”
Follow the Leader?
Some companies have beaten the Russell 3000 index handsomely after their CEOs have bought stocks while others have underperformed.
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Investors may be able to learn a thing or two from studying bets like his. New research suggests that closely following the trading patterns of corporate insiders—who are allowed to buy and sell their companies’ stock during certain time windows—may help outside investors earn big returns.
via Current Account: Benefits of Studying Insiders’ Trading Patterns – WSJ.com.