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Insider Trading Profit Strategy
According to Insider Trading Expert at pro-fundity investment education
(at http://www.pro-fundity.com)
# For purposes of the Provident Investor, insider buying is more important than
selling. There are many reasons an insider (or anyone else, for that matter) would
sell a stock; college tuition, mortgage payments, auto purchase, vacation
expenses, etc. However, there is only one reason an insider would buy company
stock; They expect the price to go up! Any benefit we derive from an
understanding of insider trading will come predominantly from buying. However,
because of the difference between buying and selling motivation, there are
always more insider sells than buys.
# It makes a difference which company insiders are making the buys. That is,
those closer to the decision-making process will likely have a better vision of
where the company is going. They stand to lose more if their predictions go awry.
This “creme of the crop” insiders include the Chairman of the Board (COB), Chief
Executive Officer (CEO), Chief Financial Officer (CFO), Chief Operations Officer
(COO, or CO), and President (P). A Director (D) may be privy to high-level insider
information. This crop of 1st-team insiders will carry more weight as we assess the
importance of Insider information.
# As we look for messages in insider data, the following are important:
* How large was the trade (how many shares or the dollar value)?
* How much of an insider’s holdings were included in the trade?
* Is there a consensus by more than one insider in the company making the same
trade?
* Which officers in the company are making the trade?
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