Anytime you deal with company insiders on Wall Street it’s important to remember that not all insiders are equal.
An insider can be a company officer, a director, or a 10% owner. Obviously not all of those people will have the same experiences and get the same exact information regarding their company.
And of course the CEO should be at the top of the insider list, which is why I became so interested in why this CEO was dumping hundreds of thousands of dollars into this company’s stock…
It makes sense, right?
The CEO of a company will have the most inside information, the biggest influence, and the most accurate expectations for his or her company, at least in theory.
So we should take that into account when we study the insiders.
And that’s why Jay Schottenstein caught my eye by purchasing 500,000 shares of his company’s stock, American Eagle Outfitters Inc. (AEO), over a recent 5-day span.
The two purchases he made in late September total an estimated $7.24 million in shares.
That kind of insider transaction screams confidence!
And I believe this confidence is coming from some new information that Schottenstein has, but the public doesn’t.
That’s because there isn’t a ton to like about AEO at the moment…
Both AEO’s annual and quarterly gross profit data is all over the place where you would much rather see steady increases from year to year and quarter to quarter.
And the only news surrounding AEO recently is the announcement of its integrated initiative with Bright Pink, a non-profit organization, in support of Breast Cancer Awareness Month.
Either there is more to this integrated initiative than was originally let on or Schottenstein knows something that he is very confident will push the price of AEO shares up.
After falling from a high of $21.44 to about $10 in the span of just over a year, AEO shares have jumped up since late August and are sitting above the $14 mark.
It seems that Schottenstein expects the price to continue rising, which is a good enough reason for me to keep my eye on this stock.
If more indicators begin pointing up for AEO, I will definitely consider purchasing this stock.
The vital part of the equation is knowing WHEN to buy and sell, which you can learn through our Stock Code Breaker course.
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