UPDATED: April 2022
5 Ways Investors Can Profit Via Legal Insider Trading – Insider trading has been the talk of the town when it comes to the stock market and trading on the stock exchange. While insider trading is being taken to the woodshed, there’s plenty to do with legal insider trading.
5 Ways Investors Can Profit Via LEGAL Insider Trading
By following the smart money, investors can follow the cookie crumbs back to the investing profits. So, here are 5 ways that investors can use insider trading data and information to make better, smarter investment decisions.
1. Generate Ideas for Investing – Profiting from Insider Trading
Investors come up with investment ideas in many different ways. We can use insider trading data to bubble up ideas in companies you would have never heard of otherwise. You can use stock screeners to look for a specific type of buying (say multiple insiders buying stock). From there, you dig deeper into the stocks that show up on the screen and do more research. The insider activity functions as an idea generator to find interesting investment candidates.
2. Follow the Money Flows – Profiting from Insider Trading
When fishermen go deep sea fishing, they use sonar to track the fish, so instead of waiting for a bite, they go where the fish will be. Investing is no different as people want to invest in things that they think will turn out profitable in the future. Insiders do too, which is why they put their money where their mouths are. For a senior manager to put some cash down and buy some stock in their company, it’s a bet on the future.
3. Go Contrarian to Analyst Calls – Profiting from Insider Trading
Investment analysts frequently get stock pickings wrong. These smart people can’t always win as the business is tough. It doesn’t particularly reward bold predictions and, most of the time, analysts are reactive, raising and dropping predictions in hindsight. Insiders are more likely to buy shares when their stock is out of favor with Wall Street analysts. In other words, insider trading has predictive power for future stock returns only when analyst recommendations have changed. If insiders are looking for value, they’ll buy when the stock is out of favor.
4. Examine Other Ways Insiders Get Rich – Profiting from Insider Trading
Insider trading is transparent (the activity is, at least). However, corporate insiders may use other tools to enrich themselves that make it harder for the rest of us to mimic. One of these activities places them directly across the table from other shareholders. There’s evidence that insiders use share buybacks to exploit their access to insider information and make profits at the expense of public shareholders. Managers may initiate share buybacks if they believe they can purchase stock below its fair value through a buyback or sell if the market price is bloated.
5. Piggybacking Government Insider Trading – Profiting from Insider Trading
Recent evidence that government officials exploit insider information (even if it’s not insider trading) isn’t necessarily surprising as congressmen and women seem to regularly make money off of their positions. Members of Congress routinely receive access to confidential information and act upon it. Following politicians to see what they’re investing in is a great signal to where legislation is headed in the future. This could have a broader impact than just on the stocks, and it’s important to follow the money.
About the Author & How YOU Can Profit: This article is the copyrighted product of the team at BuybackAnalytics.com .
Buyback Analytics is a Top Tier Investing Platform to help investors find, analyze, and profit from investing opportunities not found through traditional investment tools. We specialize in this simple concept: Follow the trades of Insiders – CONSISTENTLY PROFITABLE Traders, Investors, and Institutions because THEY get Inside Information that YOU don’t:
LEGAL Insider Trading / Inside Traders (CEOs, CFOs, Corporation’s Accountants & Attorneys, Politicians, etc.)
Stock Buybacks (Share Repurchases) by Public Corporations (ie. Apple, Tesla, Netflix, Meta (Facebook), Microsoft, etc.)
Market Moving Institutions (Examples: Market Makers, Investment Banks, Stock Brokerages, Hedge Funds, etc.)
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