Tracking Insider Trading: How to Pick a Winner in a Down Market
by Alexander Green, Oxford Club Investment Director
Last year was a disaster for most stock market investors. The S&P 500 fell 38%, its worst year since 1931.
The worst damage occurred in the fourth quarter. And the first quarter of this year isn’t looking much different.
We’re back within spitting distance of the November 20 low.
Yet I know a number of stock traders who are making good money right now. How? By tracking insider trading…
Tracking Insider Trading - Getting Started
The easiest way to begin tracking insider stock trading is to watch what top executives and board members are doing, as they have access to all sorts of material, non-public information. They know:
- The direction of sales since the last quarterly report.
- Whether there are any new products or services in development.
- If the company has gained or lost any major customers.
- Whether there is any takeover interest in the company - or whether anyone is talking about taking it private.
In short, they have a huge advantage when they go into the market to trade. That is why Uncle Sam requires them to file a Form 4 with the SEC - electronically - within two business days of any purchase or sale of their companies’ shares.
This information is pure gold. Let me give you an example.
A few weeks ago, David Abrams, a Director of Crown Castle International (NYSE: CCI) made the single-largest insider purchase in the nation. He bought 4.5 million shares at a cost of more than $60 million.
Based in Houston, Crown Castle leases cell towers and antenna space to wireless communications companies. Most of these are in the United States, although more than 1,400 are in Australia.
- The company has more than 24,00 towers in prime markets and is actively building more to lease.
- Recent earnings, released earlier in the month, contained few surprises.
- While earnings were in the red, revenue was still growing at 9%.
