It's widely considered that insider purchases, management buying stock in their own companies, is a strong bullish signal. Insiders have an unparalleled view on the company's current trading and fortunes, so they are in the best position to profit from a well-timed, and legal trade.
Stocks following insider buying outperformed the market by 4.5%
There is plenty of data that supports this conclusion. According to Catalyst, research by H. Nejat Seyhun published in, Investment Intelligence from Insider Trading, The MIT Press, 1998, between 1975 to 1994, stocks following insider buying outperformed the market by 4.5%, while stocks following insider selling underperformed the market by 2.7%. These results are based...
