Pick up Small-cap Gains with Insider Buying

The Penny Sleuth Features: Penny Stocks, Options and High-Growth Opportunities! Pick up Small-cap Gains with Insider Buying By Jessica Comitto April 1, 2011 Dear Penny Sleuther, When you are researching stocks to add to your portfolio it is sometimes hard to know what to look for... With so much information out there on publicly traded companies, one important evaluation that will often get over looked is insider buying. But missing out on this insider sentiment indicator could be a big mistake. Here's everything you need to know to take advantage of insider accumulation. Insider buying can often be a good indicator of what's to come... but when checking a company's insider transactions, it is important to know exactly what you're looking at. More importantly, you need to know what information can signal a major move in a particular stock. VIDEO: 6 Penny Stocks to Own Right Now... Greg Guenthner, editor of Penny Stock Fortunes is giving away 6 (SIX) penny stock recommendations to all new subscribers! But you must hurry because these plays could explode at any time. Click here to watch the video now. Tracking insider transactions can be beneficial for investors and traders. You can learn a lot by looking into the trading activity of people that are "in the know." And, because the SEC requires insiders to report their trades, the information is easily available to the public (you can find it on Yahoo Finance by selecting "Insider Transactions" on the right hand side). Peter Lynch, most famously known for his work as the head of the Magellan Fund, once said, "An insider might sell their shares for any number of reasons, but they only buy for one: they think the price will rise." There are countless reasons a insider will sell part of their stake... but who is going to buy shares if they think that the stock price will soon plummet? While this may seem like common sense, there are a few things to keep in mind... The SEC defines an insider as a person who owns a 10% or more stake in a particular company. There are both legal and illegal insider transactions. Illegal insider trading is when an insider uses or gives information that is not public to trade a security. Legal insider buying and selling is when an individual is trading based on personal reasons or information that is already divulged to the public. Insider Buying When following insider buying it is important to note some companies require employees to buy shares. Other companies offer stock loans essentially allowing employee to buy shares at a discounted price. These purchases do not necessarily show value to investors so it is important dig a bit deeper. Small purchases of shares may not be worth looking into. But if you start to see a trend of insiders purchasing shares, this could be a good indication the company will soon be in a more profitable place. Another figure to look at is when they are buying. If they are buying at a low it could be a good indication of a rebound. If they are buying at a high it could be a sign that the stock will go even higher. Insiders are prevented from buying and selling a stock within 6 months. Because of this, insiders normally buy a stock when they think it will perform well in the long term. Flash Action Market Moves Turn Just $500 Into $14 Million... One month and just three "flash action" market moves could be your chance to turn $500 into $14 million, or more. These "flash action" moves are the heart and soul of what's called the 30-Day Retirement Plan. Get the details on how you can sign up, here. Insider Selling There are two kinds of insider sellers- those who sell for liquidity purposes and those who sell because they believe the stock has run its course. Insiders will liquidate their shares for many reasons. Some of these reasons could include: Buying a house, the need for immediate cash, or they may be simply looking to diversify their portfolio. Because of this, an individual insider selling shares of stock may mean absolutely nothing to an investor. What you want to look for when looking at insider selling is clusters; groups of insiders, preferably more than 2, liquidating shares. It is also a good idea to know how many shares these insiders own. Selling 1,000 shares to someone who still has 100,000 shares in the company shouldn't send up a warning signal. However, selling off 1,000 shares when the insider only owns 2,000 may be something to pay attention to. It is also important to note when insiders are selling their shares. Most insiders aren't day traders. Many follow the buy low, sell high philosophy. Selling off shares at a 52 week high may just be a way for the insider to book profits. On the contrary, selling off shares at or near a low could be a bad sign that the company isn't doing as well. Video Reveals Secret $200 Retirement Blueprint This "Secret $200 Retirement Blueprint" shows you step-by-step how to grow a monster-sized nest egg with a little time and a tiny grubstake. Plus, act before the deadline and claim 5 reports absolutely FREE. Click here now to watch the presentation. Research has shown that insider transactions are a valuable measure of broad shifts in the market and sector sentiment. While using insider information should not be used in place of your normal research on a company, it is a good way to compliment it. Even though insider selling may not always be a good indicator of what's to come, insider buying should alert you that the people in the know have high hopes. In the small cap universe, there are a number of companies right now that are showing high insider buying. Three of them you may want to keep your eye on are Accelrys, Inc. (NASDAQ:ACCL), Hercules Offshore, Inc. (NASDAQ:HERO), Akron, Inc (NASDAQ:AKRX). Sincerely, Jessica Comitto Associate Editor, Penny Sleuth P.S. A few weeks ago I asked you to send me any investing questions that you may have... and some of you did! This article is the direct result of a question emailed in from one of you. If you have any investing questions, please feel free to email me at editor@pennysleuth.com. EXPOSED: The Biggest Scam In American History! Mad men drunk on power and driven by greed are robbing YOUR retirement! Most sickening of all, Washington fully endorses this bold-faced assault on your wealth. But Chris Mayer is exposing this scam in his brand new video presentation. PLUS, he'll show you how you could protect and even grow your wealth in spite of this scam, virtually spitting in the face of these elitist thieves. Don't be a helpless victim... Click here to act right now. Pick up Small-cap Gains with Insider Buying is featured at Penny Sleuth. The Secret $200 Retirement Blueprint Investing in Penny Stocks What Is Technical Trading Follow the Penny Sleuth on Twitter, here. Become a Facebook Fan of The Penny Sleuth, here. The Penny Sleuth, a free e-letter, offers independent news and commentary on small cap stocks, options and high growth opportunities. We sent this e-mail to KNUMASSCN@gmail.com because you or someone using your e-mail address subscribed to this service. Are you having trouble receiving your Penny Sleuth? You can ensure its arrival in your mailbox by: Whitelisting Penny Sleuth. To end your Penny Sleuth e-mail subscription, click: Unsubscribe. 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