UPDATED: March 2022
Does Insider Selling Mean Its Time to Sell? – When you’re looking at insider trading activity, there is no denying that you should look at actions instead of relying on words. You must still base your decision on a rationale. Business leaders will be happy to share why they think you should buy their stock, but insiders’ actions will reveal a whole different story behind whether investing in their stock is a good decision.
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Does Insider Selling Mean Its Time to Sell?
You can learn a lot by looking at insider selling activity to find out whether the value of a stock will rise or fall, but it isn’t a perfect method. You can’t rely solely on this insider information because insiders can be wrong at times as well. We will look at whether insider selling means it is time you should sell your stock as well.
What Is Insider Selling?
Even though trading by company insiders can be seen as illegal insider trading in some instances, most selling and buying by company insiders is legal. If the trades aren’t based on non-public and material information, insiders and corporate executives can sell and buy shares whenever they like. Even though buying and selling shares are legal, insiders must follow specific rules to ensure that they are trading within legal boundaries. That’s why public company executives and board members must report it publicly whenever they buy and sell company shares.
There are several reasons why corporate insiders and executives may choose to buy or sell shares in their company. They may think the company is heading towards greener pastures and want to maximize the profit from their stock investments. They may have been awarded shares with their compensation package and are selling their shares to diversify their investments or purchase a new house or private island.
What Does Insider Selling Mean?
It’s not a red flag if you notice one company executive selling a large number of shares while others are holding on to their shares. However, if there is a pattern of company executives dumping their shares in large numbers, it could point to a drop in the share price in the future. However, it is all speculation at this stage, and you should look at other factors as well. If there is no notable reason for insider selling activity, it is a good signal that you may choose to sell your shares in the company as well.
What you must do is look for patterns of insider selling activity. You should also consider the company’s fundamentals when choosing to sell shares. Take the most recent news about the company into consideration, the projections for its future operations, and analyst estimates before deciding to sell shares. You should only trade shares when you have complete information regarding insider trading trends and selling activity.
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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