One of the best ways to spot potential opportunity is by tracking insiders.
After all, who knows the company better than an insider – the CEO, CFO, COO, officers, employees, and directors? If they’re buying a sizable number of shares, it’s often a good idea to start looking into why and perhaps follow them into the stock.
That’s because they’re typically privy to information on new products, competition, and the operating environment of the firm. We have to consider that insiders who are buying their stock wouldn’t put up their own money unless they believed the move would be profitable. Of course, it’s not always wise to base your own buying decisions solely on the actions of insiders.
Look at Corteva (CTVA), for example.
CEO Chuck Magro paid $2.4 million for 40,000 CTVA shares earlier this month, at an average price of $60.64. A year ago, he also bought $2.6 million worth of stock. Even better, the CEO said the outlook for 2023 was “very healthy” on CNBC. In fact, as noted by TheFly.com, “2022 was a good year. We saw strong demand, and 2023 should be similar.”