Company Insiders (The chairman, president, vice-presidents, directors, etc.) are required to notify the SEC when they buy or sell large blocks of stock and this information is publically available. This data can be valuable when following investments you already own or for selecting new investments.
There are a number of Web Sites where this information is compiled. Go to the Yahoo Quote Page and after you have found the stock you want to monitor, hit the insider link inside the "More Info" box of the table..
Some rules of thumb for using insider information are:
Buying is more significant than selling. There are any number of legitimate reasons for executives to sell shares. Buying a new house, sending kids to college, or simply diversifying assets are just a few. There is generally only one reason executives buy their company's stock: they expect to make some money.
Insiders tend to be early with their transactions. A multimillion dollar investment by several insiders does not necessarily mean they expect it to recover next week. It is more an indicator of longer-term value.
Insiders closest to day-to-day operations are the most important to watch. These include the chairman, president, CFO, vice presidents, and directors.
It is always more significant when more than one insider trades. A "cluster" of activity gives a sense of unanimity of opinion regarding a company's prospects.
Options-related trades are less significant than open-market transactions. It means a lot more when insiders invest their savings than when they simply reap the benefits of buying shares at below market prices and immediately selling them for a profit.
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