Who has a better understanding of a company’s chances of outperforming – the average analyst, a columnist, or the company’s CEO? Tracking insider transactions can be a valuable strategy. After all, insiders often have better practical insights into a company’s outlook than the average investor. Especially when investing in their own company, or when multiple insiders buy or sell the same stocks at the same time.
There are 3 types of insiders:
– C-Level executives, such as the CEO, COO or CFO
– Shareholders who own over 10% of the company, and who are usually institutional investors
Today, we want to take you through our Insiders’ Hot Stocks tool. It tracks tens of thousands of corporate insiders and reveals how they are investing. It is one of our most popular tools, and a favorite of experienced investors.
As with all experts that TipRanks tracks, we measure and rank corporate insiders. You can see the Top 25 Corporate Insiders here.
What’s more, the Insiders’ Hot Stocks tool enables you to differentiate between informative and uninformative transactions, so you can exclude any that do not indicate insider sentiment from your decision making. Here’s how it works.
Insider Trading Stock Strategies
The first thing you see in Insiders’ Hot Stocks is an overview of 4 major investing trends that TipRanks has identified based on insider trading activity. These trends are:
Buy or sell transaction trends by all insiders
Buy or sell transaction trends by chief level executives
Major event strategy
Major institutional transaction events, for example a company’s owner buying shares
Top ranked strategy
Transactions made by Corporate Insiders whose historical transactions have outperformed the market
Performance is measured since January 2009, with each stock being held for one month.
By clicking on Show Detailed Performance, you reveal annual performance since 2010. You can see a breakdown of quarterly annualized returns by scrolling your mouse over the bars. You can also see average return per position and the number of stocks with positive returns below the chart.
Easily compare insider performance to sector and S&P 500 by clicking on the radio buttons at the top of the table.
Insider Trending Transactions
Next, see a full overview of which stocks are currently being bought or sold by corporate insiders.
You can easily focus on any combination of the four strategies. You can also filter which columns you want to appear on the chart by clicking on ‘Select columns’. Available data includes price change, market cap, strategy signal, last activity, length of time, stock behavior, signal reasoning and activities.
The results start with the most recently trending stocks, and you can change the order of the chart by clicking on any column header.
To add a company to your portfolio, hover over the stock name and click on the plus sign that appears.
Click on a stock’s name to see a full insider overview.
Informative vs. Uninformative Buys
To find our whether a transaction is informative or uninformative, simply click on the arrows in the ‘Activities’ column on the right-hand side of the table.
Uninformative transactions indicate that an insider is buying/selling shares for reasons that do not necessarily indicate confidence in the company, such as exercising share options. In contrast, informative transactions are deliberately made by insiders, often because they feel the stock is undervalued.
Not only will you see whether the buy was informative or not, you also see how well the insider that made the transaction is rated.
Now, Give it a Try!
Insider’s Hot Stocks is one of our most powerful tools as it follows actual transactions, not just ratings. What’s more, the transactions are being made by some of the most knowledgeable business people in the world.
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