This website provides various insider trading reports that are created using sophisticate proprietary algorithm to reveal the secrets of insider trading activities. All reports are provided to traders and investors free of charge.
Many investors have heard the term Insider trading and usually associate it with illegal conduct. In fact the term includes both legal and illegal conduct. The legal version is when corporate insiders (officers, directors, and beneficiary owners) buy and sell stock in their own companies. When corporate insiders trade in their own securities, they must report their trades to the SEC.
Illegal insider trading refers generally to insider buying or selling a security, in breach of a fiduciary duty or other relationship of trust and confidence, while in possession of material, nonpublic information about the security. Insider trading violations may also include "tipping" such information, securities trading by the person "tipped," and securities trading by those who misappropriate such information. See insider trading definition for more details.
Chart 1. 7-year Average Monthly Insider Buyers (2006 - 2012)
|Month||Unique Insiders i|
Due to SEC regulations, insiders (company's officers, directors and any 10% beneficial owners of a public company) are prohibited from buying and selling their own company securities in certain blackout periods. The result is the seasonal pattern of the insider trading activities. In Chart 1 we show the average monthly unique insider buyers across a seven year period from 2006 to 2012. It is evident that more insiders buy their company shares in months of March, May, August, and November. Understand this seasonal pattern of the insider trading is important as it will help us uncover the relationship between the insider trading and the stock market actions. In Chart 2 to Chart 7, we show the monthly unique insider buyers and the seasonally adjusted figures in each of the year 2006 to 2011. The results indicate a strong correlation between the insider trading and the stock market behavior.
Chart 2. Monthly Insider Buyers 2006
|Month, 2006||# Insider Buyers i||Seasonal Adjusted|
In 2006, we saw muted insider buying while the stock market was advancing without incident.
Chart 3. Monthly Insider Buyers 2007
|Month, 2007||# Insider Buyers i||Seasonal Adjusted|
More insiders came into the market in the last half of 2007 when the stock market started sliding. They seemed to be a little too early.
Chart 4. Monthly Insider Buyers 2008
|Month, 2008||# Insider Buyers i||Seasonal Adjusted|
Throughout the 2008 bear market, insider buying was heavy and persistent. In October and November of 2008, an unprecedented number of insiders bought their company shares when the market tanked more than 40% from its peak.
Chart 5. Monthly Insider Buyers 2009
|Month, 2009||# Insider Buyers i||Seasonal Adjusted|
In March 2009 insiders once again aggressively bought shares when the DJIA dropped 54% from its peak value achieved on October 2007.
Chart 6. Monthly Insider Buyers 2010
|Month, 2010||# Insider Buyers i||Seasonal Adjusted|
In June 2010, the market was down 10% from its recent high and insiders showed some modest buying interest.
Chart 7. Monthly Insider Buyers 2011
|Month, 2011||# Insider Buyers i||Seasonal Adjusted|
Insider buying activities remain muted since the stock market recovery in March 2009. In August 2011, however, the market was down 20% and insiders once again rushed into the market to buy shares.
In this study, we showed that insider trading exhibits a seasonal pattern. In the absence of stock market turmoil, more insiders will buy their company stocks in May, August, and November than in other months of the year. The relationship of insider trading activities and the stock market can be revealed when the trading activities are scaled to the seasonal patterns. We showed that more insider buyers will come out and buy shares when the stock market comes down. In fact, it is shown above that the more the market drops, the more insider buyers it attracts.
Never before has monitoring insider trading become so easy. Insiders (corporate officers, directors, and beneficiary owners) are now required to report to the Securities and Exchange Commission (SEC) within two business days after they trade stocks of their own companies. We report this vital insider buying and selling information to the public in daily, weekly, monthly, and real-time reports.
Insider trading analysis guru George Muzea wrote a book called The Vital Few Vs the Trivial Many: Invest with the Insiders, Not the Masses. (See link in page insider trading resources). He called corporate insiders "the vital few" and investor masses "the trivial many". By following the vital few, he made big profits in the stock market for himself and for his corporate clients. Most insiders including CEOs, CFOs make a living on a moderate salary (See management salary). Sale stock at a profit is an important source of income for many of them.
Note that insider stock trading activity should not be used as a simple technical indicator when deciding to buy or sell a stock. However, insider buying and selling activity is a good starting point to further investigate a company, either by analyzing the fundamental data of the company or by studying other insider trading related matters such as the stock trading history of the insider, the type of insider (officer or beneficiary owner) etc.