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Looking for the Best Penny Stocks? Look for Insider Group Trades

When consider which might be the best penny stocks or even blue chips, it is always more significant to see a group of insiders trading within a short period. Insiders are only human and, as such, can be wrong. So activity that indicates there is a consensus among a few insiders about their company's prospects is a strong signal. Common sense suggests that the odds of two, three, four, or more insiders being wrong are much less than the odds with just a single insider.
You might think it unlikely that four or five insiders would call their stockbrokers in the same week but you'd be surprised. It is actually a pretty common phenomenon. Corporate governance also encourages group insider transactions. To prevent lawsuits by shareholders, most trading occurs on non-public information. More importantly, the compliance procedures of public companies allow insiders to trade only during certain windows. These time windows generally follow the release of such important news as quarterly earnings, new contracts, mergers and acquisition activity.

Be Aware of BAD Group Trades

If you see numerous insiders buying the same number of shares on the same day at the same price, the purchases were probably not made in the open market. It is highly unlikely that all the officers called their stockbrokers and ended with the same exact trades.
Sometimes clusters of transactions are obviously "BAD" and show that all the insiders bought lots of shares sometimes at a price outside of the stock's trading range for the day or even for the year. The number of shares the group insiders traded may also be more than the total trading volume of the shares on the day. If you come across BAD group trades when looking for new investments, just move on to the next company. If this activity occurs in a company you own, you should probably give the company's investor relations department a call for a quick explanation.
Do you know the Research Tools has a feature that displays insider group trades in a dynamic stock price chart?


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InsidersLab.com focuses on tracking and monitoring insider trading activities in the US stocks market. "Insider Trading" means trading activities created by company directors, senior officers, individual substantial shareholders, and institutional shareholders. InsidersLab.com does not represent, warrant, nor endorse the accuracy, reliability, completeness or timeliness of any of the information, content, views, opinions, recommendations or advertisements (collectively, the "Materials") contained on, distributed through, or linked, downloaded or accessed from any of the services contained on the website (the "Service"), nor the quality of any products, information or other materials displayed, purchased, or obtained by you as a result of an advertisement or any other information or offer in or in connection with the Service (the "Products"). InsidersLab.com collects insider trading information from different public sources such as newspapers, financial information websites, and government statistics publications. You hereby acknowledge that any reliance upon any Materials shall be at your sole risk. In particular, none of the Materials is provided on the InsidersLab.com website or emails with a view to inviting, inducing or encouraging any person to make any kind of investment decision. Securities or other investments referred to in the Materials may not be suitable for you and you should not make any kind of investment decision in relation to them without first obtaining independent investment advice from a person authorized to give it.