Insider buying, not to be confused with insider trading, is one way to track which stocks executives are buying with their own money. Company insiders - a group that includes corporate officers, board directors, and 10% shareholders - are required to report their stock purchases and sales via a Form 4 filed with the SEC, which can offer valuable information to investors.
That said, not every insider transaction is equally compelling. Executives with large stakes may sell shares on a regular schedule to diversify their holdings, or simply to free up some liquidity. Alternately, share purchases may be carried out using stock option grants, which means insiders are buying at prices that are virtually unavailable to the broader investing public.
