Predicting Stock Performance Using Insider Activity

How to predict stock prices with insider trading

February 2022

Predicting Stock Performance Using Insider Activity in 2022 – Insider trading activity can be difficult to predict as you need to understand the motivations of insiders when they are trading in company stocks. That makes predicting stock performance using insider activity impossible, but there are ways you can use it to your advantage. The main concern that you must have when predicting stock performance is the number of insiders who are making trades in the market.

Predicting Stock Performance Using Insider Activity

When insiders are confident in a stock, they will invest a major chunk of their money into the stock. That will result in more insiders buying the stock, and suddenly, the demand for the stock rises. That demand will then trigger a rise in stock price, and pretty soon, investors will be reaping the benefits of their investment. However, it doesn’t work that way for all stocks, as there are key indicators that determine whether a stock price will rise or fall in the market.

We will share the best ways you can predict stock performance using insider trading activity. You should look at all the various factors in play before investing in any stock, and these tips will help you make profitable stock investments. Here is what you should know:

1. Insiders are Buying Stock in Bulk

If company insiders are buying stock in bulk, it is a strong indicator that they believe the stock price will go up in the future. They have access to the financials of the company and know that there will be a major announcement in the future that will see the stock price rise. Therefore, you must look at which quantity the stock is being bought by insiders. When more insiders are purchasing stock in bulk, it shows you that they are confident the stock will perform well in the coming months.

2. The Company Has Repurchased Shares

Another stock signal that investors can look at is whether the company has repurchased shares recently. That shows the company thinks its stock is undervalued, and most corporate insiders will choose a stock buyback to drive the stock price up. You can learn a lot from a stock buyback as it signals that the company wants to increase its stock price and believes that it is currently trading below value. That places you in a solid position to invest in that company’s stock and benefit from the stock price going up.

3. Top-Level Insiders Are Investing in Stock

When the top-level insiders in a company invest in the company’s stock, it is a good indicator they believe the stock price will increase in the coming months. You can look at which insiders invest in company stock and use that information to predict stock performance in the future. That will place you in a strong position when you want to invest in company stock.

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About the Author:  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.)

Use of Our articles: You are welcome to benefit from lots of FREE articles that you can read and learn from on our website blog.  You are also welcome to share or post this information as helpful content to your website or blog audience as long as the article, and this entire byline are left intact, word for word.  If you would like us to provide you with more, or bulk content for your blog or website to educate your audience on basic to expert financial and investor information & techniques, feel free to contact us at info@buybackanalytics.com .

3 Myths About How Share Buybacks Affect Stock Performance

The myths surrounding share buyback and their impact on the market

UPDATED: March 2022

3 Myths About How Share Buybacks Affect Stock Performance – For the past few years, companies in the United States have been on a share repurchase spree. This has raised concerns that the current high levels of the stock market are being driven by the appetite of businesses for their stocks. A share buyback-driven stock market may seem vulnerable, but companies have good reasons to buy back their shares. That’s because share buybacks offer companies a suitable way for returning profits to shareholders.

3 Myths About How Share Buybacks Affect Stock Performance

They also manage to boost share prices as demand outnumbers supply and reduces the total number of outstanding shares. The profits are then divided, which increases earnings per share (EPS) and makes the company more attractive for investors. Like other characteristics of stocks, share buybacks can be a major factor for exploiting the stock market to beat long-term returns.

Many investors have concerns about the high numbers of stock repurchases, which have resulted in a lot of misinformation being shared. We will look at 3 of the most concerning myths that have risen and debunk them here for you.

1. Myths About Share Buybacks – Share Buybacks ONLY Represent Short-Term Thinking

The critics of share buybacks claim that companies who buy back their stock are only thinking about short-term gains. That’s mainly down to the fact that they use the cash that’s meant for investment and innovation. Even though share buybacks are high, a recent report from JP Morgan has shown that at 2% market capitalization of the S&P 500, they meet the average for the past 15 years.

The volume of share buybacks has risen, but that’s mainly because companies are making more money, which has raised market capitalization and stock prices. Businesses have also been using cash repatriated after-tax to repurchase stock.

2. Myths About Share Buybacks – Companies Are Never Making the Best Use of Capital

The truth is, even though share prices of stock that are repurchased are higher than their average historically, they are still cheaper than the prices in the market. You won’t get better returns if you are buying cheaply because, after the financial crisis of 2008, companies who bought shares back at discounted prices were lagging behind those who repurchased at higher prices.

Valuations are set by the investors, and deciding to buy back stock is mainly down to the company thinking that their stock offers better value than any investment opportunity at that stage.

3. Myths About Share Buybacks – Companies Always Raise their Debt to Buy Back Shares

This is another myth that stems from the fact that companies borrow funds for share buybacks and capital spending. This trend is expected to catch on, but investors aren’t concerned about this right now. That’s because companies who raise their debt to buy back stock aren’t punished, and they generate similar returns to companies with lower debts.

Conclusion to 3 Myths About How Share Buybacks Affect Stock Performance

Companies that have weak balance sheets have been outperforming those who have debts, and it’s mainly because investors have faith that the company will pay off their debts when their share prices improve after buybacks.

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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.)

Use of Our Articles: You are welcome to benefit from lots of FREE articles that you can read and learn from on our website blog.  You are also welcome to share or post this information as helpful content to your website or blog audience as long as the article, and this entire byline are left intact, word for word.  If you would like us to provide you with more, or bulk content for your blog or website to educate your audience on basic to expert financial and investor information & techniques, feel free to contact us at info@buybackanalytics.com .