I’ve written recently about insider buying. As I wrote before, company insiders can sell their company’s stock for any number of reasons. Perhaps they are diversifying or reallocating their portfolios, or perhaps they decided to pony up for a beach house.
But there is only one reason why company insiders would buy their company’s stock, and that is because they consider it underpriced and due for a bounce.
With that in mind, I ran a stock screen for insider “cluster buys,” or large purchases by multiple insiders. In order to make the cut, a stock had to have multiple, unique insider buys over the past three months. And with no further ado, here is a list of the top five ranked by number of insider buys:
Aircastle Ltd (AYR): 21 insider buys for a total 663,400 shares.
RLJ Entertainment (RLJE): 12 insider buys for a total of 30,082 shares
ERF Wireless Inc (ERFB): 9 insider buys for a total of 229,412 shares
Remax Holdings Inc (RMAX): 9 insider buys for a total of 51,450 shares
Main Street Capital Corp (MAIN): 9 insider buys for a total of 6,113 shares
Of each of these stocks, only two have had significant price movements since the insider trading began. ERF Wireless is down 72% and Remax is up 37%.
An insider buying screen does not constitute exhaustive research, of course. You still need to roll up your sleeves and investigate any stock before you buy it. But a screen like this can be a useful first step. If the insiders are buying, it’s a stock that is worth a look.
But there is only one reason why company insiders would buy their company’s stock, and that is because they consider it underpriced and due for a bounce.
With that in mind, I ran a stock screen for insider “cluster buys,” or large purchases by multiple insiders. In order to make the cut, a stock had to have multiple, unique insider buys over the past three months. And with no further ado, here is a list of the top five ranked by number of insider buys:
Aircastle Ltd (AYR): 21 insider buys for a total 663,400 shares.
RLJ Entertainment (RLJE): 12 insider buys for a total of 30,082 shares
ERF Wireless Inc (ERFB): 9 insider buys for a total of 229,412 shares
Remax Holdings Inc (RMAX): 9 insider buys for a total of 51,450 shares
Main Street Capital Corp (MAIN): 9 insider buys for a total of 6,113 shares
Of each of these stocks, only two have had significant price movements since the insider trading began. ERF Wireless is down 72% and Remax is up 37%.
An insider buying screen does not constitute exhaustive research, of course. You still need to roll up your sleeves and investigate any stock before you buy it. But a screen like this can be a useful first step. If the insiders are buying, it’s a stock that is worth a look.
