“Davidson” submits:
One of the more useful tools comes from reports of Insider Trades to the SEC. Open Insider publishes this data online. Periods when insider buying rises promently higher than the average pace of buying have always been useful signals when combined with positive economic data and low equity prices in well managed companies. Most important is when insiders who display a history of strong management skills and financial performance are accumulating shares. We saw this in the Dec 2018 correction but have also seen higher bouts of buying in March 2019 and the past few days.
While insider selling is not typically useful, buying often signals positive business dynamics are likely. Buying may be the result of a new CEO, the beginnings of a new product line or some other longer term positive. Insiders cannot buy shares in anticipation of short-term events. Insiders may raise their holdings a few years prior to investors becoming aware of events which cause shares to rise. One needs to do some homework to understand the likely dynamics behind each bout of insider buying.
Recent bouts of insider buying can be tied to the current strong pace of US economic activity and the promise that current government policy initiatives may extend the expansion for a few years.
The best insider signals have always been from individuals with a long record of solid financial performance. There are several dozen companies providing such signals today.
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