When insiders are buying their own stock, investors need to sit up and take notice.
Although not a guarantee that a stock will rise – nothing is – insider trading activity reflects confidence in a company's potential by the people who should know best. In particular, insider buying can be an early indicator of change in fortune for a stock that has been beaten down.
And because inside stock buyers are in it for the long term – they're not permitted to make short-term profits – they only buy when they feel reasonably certain of their company's longer-term prospects.
So while such companies may not offer a quick profit, they're usually worth a hard look for investors with a longer time horizon.
Lately – within the past month – insiders at five energy companies have been buying up shares of their own stock.