As I write research on stocks, readers of my work often contact me and indicate when insiders are purchasing their own stock. I can attest that most analysts believe an insider buying shares of his own company is the best thing since no-load funds. The purchases become an incentive for others to buy.
Peter Lynch, the famed investor and former manager of the Magellan Fund even trumpeted the value of insider buying. Paraphrasing one of his insights; there are many reasons insiders sell, but just one reason they buy – they think the price is going up. Perhaps the theory was correct in the past, but no longer. Years serving insiders buying and selling their company’s stock has shown there are many reasons insiders buy. In fact, there are quite a few reasons; just a few are listed here.
