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"Buy when everyone is selling."

How many times have you heard that advice as stocks are plunging?

I don’t know about you, but it’s easier said than done.

But there’s one group of investors who charge in to buy when stocks are selling off: the corporate insiders.

How do they do it?

They have 2 key advantages over you and me that provide them the edge during uncertain times. If you follow their lead, you can have that edge too.

Two Key Advantages Give Insiders the Edge 

1) Key Advantage #1: Insiders Know Their Business

Everyone knows that information is power.

Who knows more than those who are actually running the company?

The corporate insiders, including the CEO, CFO, General Counsels, and even the Head of Human Resources, know who is getting hired or fired. They know that last month was a record month for sales and that there is a new factory that is opening in China which hasn’t been announced publicly yet.

They know when their business is booming.

Even better, they can actually purchase their company’s stock, knowing all this information, and it’s perfectly legal.

When corporate insiders get excited about their company’s prospects, you should too.

2) Key Advantage #2: Insiders Know When to Buy

Insiders don’t buy their own shares willy-nilly. As a stock rallies, insiders are likely to stay on the sidelines because their stock is no longer cheap.

Insiders like bargains just like the rest of us.

That’s why during this summer’s stock rally, the insiders went quiet. Just like you and I, the insider doesn’t want to buy an overpriced stock.

But when the company stock sells off, especially in a short period of time, the insider sees it as an opportunity. The insiders want a deal.

In 2022, stocks have sold off and many are down over 20% or more since the start of the year, even with the summer rebound. There are a lot of stocks suddenly on sale for the first time in 2 years.

Many companies are now trading with single-digit P/Es and PEGs under 1.0, which indicate strong growth.

There are deals.

Insiders Are Buying Again This Summer

It’s not surprising, then, that after a company reports earnings, some corporate insiders are stepping in to buy their shares on the cheap.

And when the market took another dive in June, many stocks simply got too cheap for the insiders.

As we’ve seen, the insiders like to buy when there are dramatic sell-offs. When everyone else is selling, they see a bargain. Remember, they have knowledge of what is going on inside the company so they are more optimistic than the rest of us.

They know, based on sales, hiring, and expansion plans, that business is simply not that gloomy.

In 2022, even some of the FANGMAN stock insiders have jumped in to buy, which rarely happens as they already have millions of shares. Netflix’s CEO Reed Hastings bought $20 million in stock as Netflix shares took a dive after fourth-quarter earnings in January.

That’s a buy that is made when the insider thinks the shares are oversold. Netflix shares have jumped 21% in the last 3 months.

Are you ready to follow their lead?

Where to Find the Insider Buys

Anyone can go on the SEC website and get the insider trading information but it’s time consuming to search by individual companies.

Additionally, the SEC recently re-formatted the website, making it even more difficult to track who is buying or selling what.

Some investment firms collect the insider buying data and can provide it to you as a weekly list. Have you ever seen one of those lists? The sheer number of companies can be overwhelming.

When the insiders step in to buy in bigger numbers during a market sell-off, it can become even more overwhelming with dozens of insiders buying at numerous companies.

Imagine trying to figure out which of those companies you should be buying!

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