CEOs: Put Your Money Where Your Mouth Is

by Robert Williams, Publisher
Wednesday, October 21, 2009

It’s well documented. Insider buying is a terrific way to gauge a stock’s investment appeal. (Investment legends, like Peter Lynch, have long sung the praises of insider buying.)

I mean, can you get a better vote of confidence from a CEO than one that’s willing to open his own checkbook for shares?

Probably not.

That being said, such buying alone should never warrant entry. Other factors are always “in play,” too.

For example, what warrants a “significant” buy on behalf of an insider? Well, with access to the right information, you can track the amount an insider antes up relative to his salary.

You’d also be interested in knowing whether the “buy” is merely an exercising of stock options, or a genuine purchase of shares.

My point is that all this (and more) matters.

Fortunately, Alexander Green tracks insider trading, both buying and selling, religiously for us here at Investment U. And he knows better than anyone whether a stock whose shares are under accumulation by insiders really warrants our hard-earned investment dollars.

In fact, subscribers to his Insider Alert have closed out winning positions on 15 out of 20 stocks this year. So class is officially in session. Read more on his article about insider selling.

Ahead of the tape,

Robert Williams

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