There are many reasons for company insiders to sell shares in the company they work for. To pay for a new swimming pool. To pay their kids’ private school bills. To add an Aston Martin to their collection. To diversify their wealth. Whatever it is, people need money to “survive”. Even top CEOs and company directors…
But there is only one reason such an insider would increase their exposure by buying more shares.
After all, a company insider is already dangerously overexposed to the company they work for. Their salary, their future compensation and their reputation is tied up in one name.
But when insiders decide to double down, increase the size of their bet and ramp up the stakes even more, that’s a clear sign of their optimism about the future for that company.
That is why Brian Christopher carefully tracks the insider dealings of high-ranking company officials – the sorts of people who are best placed to judge the future success of the company they help to run.
And when he finds evidence of insider buying, that gets his attention enough to dig deeper. Think of it as his first filter. Without insider buying, he just doesn’t bother any more.
Now, it’s no safe bet. As he writes in one of his reports:
A CEO buying his or her company stock, doesn’t mean the stock price will shoot up immediately. But it does mean there are good things happening behind the scenes. Things that you and I don’t know about… until a company makes a public announcement.
So, what happens when investors make such insider buying part of their filter for which stocks to buy?
Find out in this video with Brian Christopher…
And if you’d like to hear from Nigel and other guests more often and more conveniently, why not sign up to the new Fortune & Freedom podcast on Apple Podcasts, Spotify, Amazon Music or Google Podcasts?
Nick Hubble
Editor, Fortune & Freedom
