You can read all the financial reports and prospectuses you can get your hands on, but there will always be people who know more than you ever will about whether or not a company is a good investment: the insiders.
And, thankfully, insiders are also investors in their companies just like we are. This is a good thing for two reasons:
Insiders, by definition, are officers and directors with a stake in the company. They are the folks at the top making the big, corporate-wide decisions.
Here at MyWallSt, we like to see insiders with a greater than 5% ownership in the business they're paid to run.
You'll usually find that the older a company is, the lower the insider ownership.
You can find this information in the "Key Statistics" section on financial websites like Yahoo Finance.
From H. Nejat Seyhun's book Investment Intelligence from Insider Trading we learn when to sit up and take notice of insider buying and selling:
There you have it... now, when the financial talking heads start squawking about insider buying and selling, you can take a few steps back and see if it's really anything that concerns you as a shareholder.
MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here.
The Home of Successful Investing.
© 2023 MyWallSt Ltd. All rights reserved.