The Best Way to Profit from Insider Buying
Many investors think that they can divine stock performance simply by tracking insider transactions.
It makes sense: Executives and directors running a company have a much better view of what's going on in it than analysts covering their stock. So if they buy shares, then they believe their stock is undervalued, and if they sell shares, then it must be because they think their stock is too pricey or there are bad things in the company’s future, right? Wrong.
Because insider transactions have received more and more public attention over the last few years, insider buying is now often used by company officials as a public relations ploy. When the company is doing badly, company officers will buy stock to put on a happy face to investors. Further complicating the matter is the large amount of option compensation given corporate executives these days. A good amount of experience, research, and analytical skill is required to see through these false insider leads and to separate the true insider-created opportunities from the false ones.
But when used correctly, insider buying has forecasted large advances in industries like coal mining, real estate investment trusts, generic drugs and broadband equipment. Insider buying has also foreshadowed takeovers in specific companies in industries as diverse as power utilities, banking and wireless phone service.
There are many insider newsletters and services available to the public. Most simply list stocks in which there has been insider buying; a few add scant, superficial analysis. At Jack Adamo's Insiders Plus, we believe this approach is woefully inadequate. Jack Adamo has based his successful weekly Insiders Plus service around meticulously tracking and decoding insider buying. And it works.
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