Insider transactions take many forms. In this article, I’m going to discuss what the large publicly disclosed stakes taken by private equity firms or large corporate conglomerates mean for investors and how said investments ought to shape retail investor decisions.
I tend to follow specific investors who hold similar investing styles as myself. In particular, Warren Buffett and his investments made through his company, Berkshire Hathaway Inc. (NYSE:BRK.A), are investments I take a second hard look at. Buffett’s updated positions on various asset classes, his overall view of the market and his specific investments or divestitures noted in his quarterly reports, I take into serious consideration when assessing my own watch list.
I would encourage all investors to pick an asset manager with an investing style as close to their own as possible and watch and learn. Looking at the publicly disclosed insider transactions of such money managers can be one of the most insightful exercises one can engage in. That being said, insider transaction information is often only a signal and can sometimes be wrong.
Speaking with a certified financial advisor is a great way to validate one’s concerns. Insider buying and selling activity is not necessarily indicative of the future performance of a given company’s stock price, and insiders regularly buy or sell positions in companies they own or manage for reasons other than expectations of future stock price performance.
Analyzing insider transactions in a given stock is one tool of many to gain pertinent information to assist in investment decision making.
Invest wisely, my friends.
