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Brian Bolan Looks at Insider Selling and Insider Buying

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This week in Brian‘s big idea we take a look at insider selling and insider buying.

There are a lot of preconceived notions that when insiders are selling, it’s a bad thing and you should avoid a stock that has a lot of it. It’s only common sense to believe that if the CEO is selling tons of stock that you should not be a buyer of it. But is that always the case?

Brian takes a look At Meta (META - Free Report) and talks about how Mark Zuckerberg is selling stock. The first thing that we need to realize is that, although Mark Zuckerberg is selling stock in the market nearly every day, it is a very small percentage of his overall holdings.

Selling 28,000 shares a day would take a very long time to sell all of his 9 million shares. So Are his sales impacting the price of the stock?  The answer is clearly no, but it is a good idea to keep an eye on the sales should they start to increase.

Another example that Brian brings to the table is that of Rover Group . The CEO was selling shares even as the company was in talks to sell the company to Blackstone. If investors were to avoid stocks in which the CEO was selling then you would’ve missed out on a potential buyout target.

At the end of the day, CEO’s and other insiders are compensated, partially, in stock and they will continuously be selling shares into the market. Insider sales should only be viewed as negative if it is a large chunk of stock that is a significant percentage of their overall holdings.

On the flip side insiders sometimes buy shares of the company they work for. This doesn’t mean that is always a good opportunity to put your money to work.

Zacks Investment Research has a great service that tracks insider buying and then leverages the Zacks Rank to find the best opportunities for the regular investor.

Insider Trader Is a service run by Tracey Ryniec  and she looks for insider purchases with companies that have a high Zacks Rank.

Towards the end of the video, Brian shows Tracey‘s recent performance and notes that she does not have a single loser on the books at present.

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