What is smart money?
If you ask me, I say that smart money is the cash that people in the know are handling. I’m talking about the people who have access to information that virtually nobody else does.
Those people already know what’s going to happen next, and when they put millions in one spot, I pay attention…
One of my favorite things to do is to spy on the CEOs of companies to see what they’re up to, where they’re putting their money, etc.
A CEO would know the most about his or her company, right?
If a CEO knows about a terrible earnings report coming out, bad test results being released, or something along those lines, then he would likely keep his money out of the company’s stock.
Conversely, if a CEO knows that his company just beat earnings expectations, or that his company just created a brand new product that is testing incredibly well, he could buy tons of stock in his company knowing full well that the good news will likely make the price climb.
Now, insider trading is illegal, but it’s hard to prove someone’s guilt because many insiders know how to get away with it one way or another…
I obviously can’t say for certain that a particular insider is participating in insider trading, but when several insiders of the same company all buy stock in their company at the same time, that should clearly set off the alarm bells.
Why would they all do so at the same time?
If common sense is any indicator, wouldn’t you say that it’s at least plausible that those insiders all just found out some piece of privileged information?
Well, there are definitely alarm bells going off right now for Blackstone Mortgage Trust, Inc. (BXMT):
- 3 different insiders, including the CEO, all just bought shares of BXMT
- All shares were bought on the same day
- The 190,000 shares purchased were worth over $5.8 million
Did those insiders perhaps know about the acquisition of 16 UK logistics assets? Did they realize that their company would be announcing those acquisitions just days after they purchased stock?
You be the judge.
In my mind, BXMT is clearly a stock being led by the insiders, and any further insider buying will be a buy signal for me…
