Although virtually every insider transaction has some sort of significance to a certain degree, not all insider actions are equal. For instance, purchases and sales are not equal for a stock.
In other words, some circumstances surrounding insider transactions are just more meaningful than others.
One of the most powerful situations is when several officers of a company are purchasing hundreds of thousands of dollars worth of stock each in their own company. And that very situation is occurring with this company right now…
Think about it. When one company officer decides to buy stock in his own company, he or she might know something important in regard to the future of the company. But why aren’t the other insiders purchasing stock?
Maybe the information isn’t impactful enough. Maybe the one insider who did buy simply wanted stock in his or her company for no special reason. For us, this doesn’t mean too terribly much.
On the other hand, when the CEO, CFO, COO, and other officers decide to buy a ton of stock in their own company around the same time, something is definitely up. Those insiders most likely have information that has a good chance of pushing the price of their stock up, and they are trying to get in early to make big profits.
Is that what is happening with Herbalife Ltd. (HLF)?
HLF is a nutrition company that sells weight management, healthy meals and snacks, sports and fitness, energy and targeted nutritional products, and personal care products worldwide.
Four different officers of HLF bought shares in that company between July 31 and August 4. Those shares total more than a value of $1.76 million!
That’s a very strong situation for HLF. And this is the kind of situation that we can end up making big profits from.
But before we can dive in and make money, we have to remember one thing: While insider buying and selling can be a powerful indicator, it doesn’t tell us WHEN to buy.
This set of circumstances gives us a pretty big hint that HLF will go up at some point, but we still have to use the principles taught in the Stock Code Breaker course to know when to enter the trade and earn profits.
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