Corporate insiders — officers, directors, and large shareholders — are required to report their trades publicly. These are legal transactions distinct from illegal insider trading (trading on material non-public information).
Open market purchases by insiders are considered the most informative signal because insiders are spending their own money to buy shares. Studies have shown that insider buying tends to precede outperformance, while insider selling is a weaker signal since insiders sell for many reasons (diversification, taxes, life expenses).
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