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Q & A

What is an Insider?
An insider is an officer, director, or beneficial owner of any publicly traded US company. Insiders know what is going on in their company. They have a tendency to buy before the stock rises and sell before it falls. Insiders are required to file their transactions with the Securities and Exchange Commission within two business days following their transactions.
Why does your system work so well?
Studies have shown that stocks with insider buying outperform the market by 7.5% (Nejat Seyhun, Investment Intelligence, page 61) over the following twelve months following substantial insider purchases. While those stocks with insider selling under perform the market by 6.1%. Insiders are also very knowledgeable about their company. They work there, and know what type of business conditions will drive the stock price up and down. When an insider purchases stock, they see either value or improving fundamentals. They are wrong sometimes, but not often. We also have many smaller stocks on our buy list. These smaller stocks often don't have analyst covering them so they tend to be more inefficiently priced than the larger stocks that have analyst coverage. In the case of these small companies, insider buying is often the only clue to the company's health.
I noticed some other stocks with insider buying, how come they are not on the buy list?
We only focus on the most optimal buy patterns. In particular, we like those patterns with unusual insider behavior. For example, insiders that have not bought in many years, insiders that have bought well in the past, and insiders that are making an unusually large purchase may signal strong business conditions, a precursor to higher stock prices. We also like patterns that involve reversals, such as when an insider sold in the past, and then turns around and at a later date buys a substantial amount of stock. A good sign that the insider may now see value or improving fundamentals ahead.
Do you recommend selling stocks?
Insiders are required by law to hold a stock for six months after they purchase it. We generally recommend an investor use a stop loss if they take a long position. Our service points out where insiders are buying, which indicates the potential that the stock is residing at a low-risk entry level. We leave selling decisions up to the individual investor.
Why don't you don't show all insider activity?
We focus on open market transactions, as they are the most relevant and meaningful.
Why do some of your stocks have selling in them?
Insiders are much better at buying than selling. It is normal for insiders to sell and take profits. They sell for many reasons.. What is important is the buying. They only buy for one reason. That is, they think the stock is headed higher. Buying into price strength, reversals from selling to buying, unusual large purchases, these are the patterns that suggests higher stock prices to come, even if it is accompanied by some selling by other insiders.
When are new stocks available? How many picks are available?
Insiders are required to file with the SEC within two business days of their activity. So we are constantly monitoring for interesting and meaningful trades. When we find one, we will let you know. Generally, there will be a couple of new stocks per week. But sometimes less and sometimes more. During earnings releases, insiders are prohibited from buying and selling. At these times, there will be less activity.
Does InsiderPicks.com provide any other insider services? Such as the ability to search insider transactions?
No. We are a stock picking service. We search through the insider transactions so you don't have to. We pick those transactions that are most significant and interesting, and present them to you.
Do you provide short ideas?
Not at this time. However, if demand is sufficient, we may provide short ideas based on insider selling in the future.
Is InsiderPicks.com compensated in any way for the companies it recommends?
Absolutely not!