FREQUENTLY ASKED QUESTIONS
1- What is insider trading?
The buying or selling of a security by company insiders (executives, directors or 10% or more security holders etc.) who have know more about the company more about the future of the company than the others in public.
2 - Is this kind of information freely available to the public?
Yes, it is free on www.sedi.ca.
4 - What is the value of tracking insider trades?
One of the world's most successful investors, Peter Lynch said, "Insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise." If insiders are buying shares in their own companies, they usually know something that the others don't. They might buy because they see great potential in their company for various reasons such as: takeovers, earnings surprise etc...
5 - What are some useful tips for following insider trades?
- CEO, CFO or COO type of officials are more significant than the directors since they know more about the company's day to day operations.
- When more than one executive is trading, it's a stronger signal to buy or sell
- Large size trades are more meaningful than the small ones
- Insiders purchase shares of their company only for one reason...they think the stock price will go up
- An insider may be selling the stock for various reasons i.e. to buy a new car, boat, house or some other cash need so don't panic... check the closing balance to see the percentage of shares being sold for a better understanding