There are many reasons for insiders to sell stocks, but there’s only one reason insiders buy: to make money.
- Peter Lynch
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This is why you should follow heavy insider buying:
Trade Example: Why did BWEN Jump Up +120%?
On the 11th of December of 2013, the President and CEO of Broadwind Energy bought more than 50k dollars worth of shares of his own company, closely followed by the CFO. The stock surged almost 50% in one week, after which it more than doubled shortly after the year was over. A +120% return by all accounts of which our subscribers took advantage!
Broadwin Energy jumps +120% after CEO and CFO buy shares
So why did this happen? Well, a few things came together at the right time. Keep in mind, however, that the stock market is not an exact science and it never will be (far from it actually), but we can identify trends and let the statistics work in our favor in the long run. That is also why we follow insider buying activity, and the juicy stories only come to the surface often after the fact.
The first point that I want to underline is that the stock practically lost half of its value in the two months leading up to the significant insider buying activity. Isn’t it at least interesting that the people who lead the company, the CEO and CFO, spent more than 100k dollars together on a stock that just lost half of its value in less than two months? Would you ever have considered buying this stock?!
BWEN lost half of its value in the two months leading up to the insider buying activity
The second point is that MidAmerican Energy Holdings, a subsidiary of Berkshire Hathaway (yes that is Warren Buffett’s company) announced on Monday December 15th, barely a few days later, that they were going to strike a huge deal with Siemens AG for a wind energy project in the American state of Iowa. In every article you can find Broadwind Energy only takes up a sliver of space mentioning that they will supply the towers for 1.9 billion dollar project funny enough. The rest is history!
Is all of this a coincidence? Well, it could be. But if it was a coincidence, it was only the millionth coincidence in the statistical history of insider buying activity and its correlation with stock price jumps.
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