Insider purchases

Insider purchases and sales are noteworthy milestones but no road map to investing success.

You're building a mosaic to decide whether you want to be invested in a company, this is just one piece of the puzzle.

But be careful before you follow in a CEO's footsteps. Knowing how much stock to put into an insider's actions, literally and figuratively, is a tricky business.

The most important aspect that the lay investor should keep in mind is that it is a first screen. Despite that caveat, though, "it's the best one that I know of".

When you see an executive put large sums of money on the line, clearly that's a signal that he feels very confident, but that doesn't necessarily mean that the stock's going to go up.

Some insider buying maybe just simply window dressing or a statement to investors.

It's possible that smaller purchases could be aimed largely at drumming up more buying.

They may hope that the publicity of their having bought will have a positive effect on the direction of the market price.

Insider Buying and Management Stock Options Can Signal Opportunity

Only one reason for insider buying

In their search for complete information on businesses, investors often overlook one very important clue. In most instances no one understands a business and its prospects better than the management. 

Therefore investors should be encouraged when corporate insiders invest their own money alongside that of shareholders by purchasing stock in the open market. 

It is often said on Wall Street that there are many reasons why an insider might sell a stock (need for cash to pay taxes, expenses, etc.), but there is only one reason for buying. 

Investors can track insider buying and selling in any of several specialized publications, such as Vickers Stock Research. 

Management stock-options provide the specific incentive to boost the company's share price

The motivation of corporate management can be a very important force in determining the outcome of an investment. 

Some companies provide incentives for their managements with stock-option plans and related vehicles. 

Usually these plans give management the specific incentive to do what they can to boost the company’s share price. 

Be alert to the motivations of managements at the companies

While management does not control a company’s stock price, it can greatly influence the gap between share price and underlying value and over time can have a significant influence on value itself. 

If the management of a company were compensated based on revenues, total assets, or even net income, it might ignore share price while focusing on those indicators of corporate performance. 

If, however, management were provided incentives to maximize share price, it would focus its attention differently. 

• For example, the management of a company whose stock sold at $25 with an underlying value of $50 could almost certainly boost the market price by announcing a spinoff, recapitalization, or asset sale, with the result of narrowing the gap between share price and underlying value. 
• The repurchase of shares on the open market at $25 would likely give a boost to the share price as well as causing the underlying value of remaining shares to increase above $50. 

Obviously investors need to be alert to the motivations of managements at the companies in which they invest.

Insider Buying and Management Stock Options Can Signal Opportunity

In their search for complete information on businesses, investors often overlook one very important clue. In most instances no one understands a business and its prospects better than the management. Therefore investors should be encouraged when corporate insiders invest their own money alongside that of shareholders by purchasing stock in the open market.

It is often said on Wall Street that there are many reasons why an insider might sell a stock (need for cash to pay taxes, expenses, etc.), but there is only one reason for buying. 

Investors can track insider buying and selling in any of several specialized publications, such as Vickers Stock Research.

The motivation of corporate management can be a very important force in determining the outcome of an investment. 

• Some companies provide incentives for their managements with stock-option plans and related vehicles.  Usually these plans give management the specific incentive to do what they can to boost the company's share price. 
• While management does not control a company's stock price, it can greatly influence the gap between share price and underlying value and over time can have a significant influence on value itself. 
• If the management of a company were compensated based on revenues, total assets, or even net income, it might ignore share price while focusing on those indicators of corporate performance.
• If, however, management were provided incentives to maximize share price, it would focus its attention differently. 

For example, the management of a company whose stock sold at $25 with an underlying value of $50 could almost certainly boost the market price by announcing a spinoff, recapitalization, or asset sale, with the result of narrowing the gap between share price and underlying value. The repurchase of shares on the open market at $25 would likely give a boost to the share price as well as causing the underlying value of remaining shares to increase above $50.

Obviously investors need to be alert to the motivations of managements at the companies in which they invest.

Insiders buying more of their own stock is a bullish signal

There are thousands of reasons for insiders to sell stock, but there's only one reason they'll buy:  They think the stock is going to go up.

After all, insiders know more about their company than outside investors ever could.  If they're buying, there's probably a pretty good reason for it.

Past studies bear this reasoning out.  They show that insider-buying is a bullish signal at both the company-specific and macro-market levels.

Insiders Selling to lock in their gains during this bull market.

Date Announced	22-May-13
Changes in Share Holdings
Company		Shrs Acquired/	Director/Substantial Shareholder	Shrs held
		(Disposed)		after Changed
ALLIANCE FINANCIAL GROUP BERHAD	AFG	(909,000)	Employees Provident Fund Board	190,793,140
		81,000
ALLIANCE FINANCIAL GROUP BERHAD	AFG	(24,400)	Mitsubishi UFJ Financial Group, Inc ("MUFG")	80,532,807
ALLIANCE FINANCIAL GROUP BERHAD	AFG	(3,400)	Mitsubishi UFJ Financial Group, Inc ("MUFG")	80,529,407
ALLIANCE FINANCIAL GROUP BERHAD	AFG	(300,000)	Employees Provident Fund Board	191,111,240
		618,100
ALLIANCE FINANCIAL GROUP BERHAD	AFG	2,900	Mitsubishi UFJ Financial Group, Inc ("MUFG")	80,532,307
AIRASIA BERHAD	AIRASIA	4,000,000	Employees Provident Fund Board	231,549,000
MALAYSIA AIRPORTS HOLDINGS BERHAD	AIRPORT	(7,700)	Employees Provident Fund Board	135,171,520
AL-`AQAR HEALTHCARE REIT	ALAQAR	1,311,400	Lembaga Tabung Haji	57,761,356
AMMB HOLDINGS BERHAD	AMBANK	(81,100)	Employees Provident Fund Board	331,972,457
		2,928,900
BENALEC HOLDINGS BERHAD	BENALEC	(2,782,000)	Kumpulan Wang Persaraan (Diperbadankan)	53,064,600
BIMB HOLDINGS BERHAD	BIMB	659,000	Employees Provident Fund Board	97,370,700
BINTULU PORT HOLDINGS BERHAD	BIPORT	(293,900)	KUMPULAN WANG PERSARAAN (DIPERBADANKAN)	38,792,300
BOILERMECH HOLDINGS BERHAD (ACE Market)	BOILERM	(668,800)	Leong Yew Cheong	38,877,412
BURSA MALAYSIA BERHAD	BURSA	(5,800)	Mitsubishi UFJ Financial Group, Inc. ("MUFG")	27,869,258
		42,400
CIMB GROUP HOLDINGS BERHAD	CIMB	(1,354,400)	Employees Provident Fund Board	877,827,032
		1,186,000
CIMB GROUP HOLDINGS BERHAD	CIMB	(433,900)	Mitsubishi UFJ Financial Group Inc (MUFG)	794,785,177
CAPITAMALLS MALAYSIA TRUST	CMMT	(750,000)	Employees Provident Fund Board	165,943,600
DIALOG GROUP BERHAD	DIALOG	2,500,000	Employees Provident Fund Board	372,190,035
DIGI.COM BERHAD	DIGI	(1,014,600)	Employees Provident Fund Board	1,201,738,740
DOLOMITE CORPORATION BERHAD	DOLMITE	278,970	HUANG JEN SOONG	9,074,073
DRB-HICOM BERHAD	DRBHCOM	500,000	EMPLOYEES PROVIDENT FUND BOARD	146,287,600
EASTERN & ORIENTAL BERHAD	E&O	311,600	CIMB COMMERCE TRUSTEE BERHAD	59,504,000
EASTERN & ORIENTAL BERHAD	E&O	8,351,900	CIMB COMMERCE TRUSTEE BERHAD	67,855,900
FELDA GLOBAL VENTURES HOLDINGS BERHAD	FGV	342,000	EMPLOYEES PROVIDENT FUND BOARD	299,986,370
FELDA GLOBAL VENTURES HOLDINGS BERHAD	FGV	(105,000)	KUMPULAN WANG PERSARAAN (DIPERBADANKAN)	253,079,800
GENTING PLANTATIONS BERHAD	GENP	(5,000)	KUMPULAN WANG PERSARAAN (DIPERBADANKAN)	46,545,700
GENTING PLANTATIONS BERHAD	GENP	(200,000)	EMPLOYEES PROVIDENT FUND BOARD	116,458,200
HAP SENG CONSOLIDATED BERHAD	HAPSENG	(8,935,100)	Gek Poh (Holdings) Sdn Bhd	1,272,992,880
HAP SENG CONSOLIDATED BERHAD	HAPSENG	(8,935,100)	Hap Seng Insurance Services Sdn Bhd ["HSIS"]	108,481,780
HONG LEONG BANK BERHAD	HLBANK	80,000	Employees Provident Fund Board	260,375,772
HOCK SENG LEE BERHAD	HSL	263,400	Employees Provident Fund Board	56,128,560
HAP SENG PLANTATIONS HOLDINGS BERHAD	HSPLANT	(2,916,000)	Gek Poh (Holdings) Sdn Bhd	424,240,000
HAP SENG PLANTATIONS HOLDINGS BERHAD	HSPLANT	(2,916,000)	Hap Seng Consolidated Berhad	424,240,000
ICAPITAL.BIZ BERHAD	ICAP	129,200	City of London Investment Management Company Ltd	12,781,900
IGB CORPORATION BERHAD	IGB	(175,100)	Employees Provident Fund Board (EPF)	92,544,122
		193,400
IHH HEALTHCARE BERHAD	IHH	1,043,900	Employees Provident Fund Board	530,355,000
IJM CORPORATION BERHAD	IJM	(123,300)	Kumpulan Wang Persaraan (Diperbadankan)	102,766,280
		200,000
IJM CORPORATION BERHAD	IJM	(500,000)	Employees Provident Fund Board	154,793,489
		100,000
IJM LAND BERHAD	IJMLAND	(174,200)	Employees Provident Fund Board	75,870,300
KUALA LUMPUR KEPONG BERHAD	KLK	31,500	Employees Provident Fund Board	162,743,138
MAH SING GROUP BERHAD	MAHSING	175,000	Employees Provident Fund Board ("EPF")	103,001,960
MAH SING GROUP BERHAD	MAHSING	(3,000,000)	Kumpulan Wang Persaraan (Diperbadankan)	57,173,866
MAH SING GROUP BERHAD	MAHSING	(3,100,000)	Kumpulan Wang Persaraan (Diperbadankan)	-
MAXIS BERHAD	MAXIS	2,019,000	Employees Provident Fund Board ("EPF Board")	478,710,400
MALAYAN BANKING BERHAD	MAYBANK	(5,698,000)	EMPLOYEES PROVIDENT FUND BOARD	874,025,124
MBM RESOURCES BHD	MBMR	(500,000)	EMPLOYEES PROVIDENT FUND BOARD	58,401,891
		170,000
MICROLINK SOLUTIONS BERHAD (ACE Market)	MICROLN	3,000	Insas Berhad	7,852,400
MICROLINK SOLUTIONS BERHAD (ACE Market)	MICROLN	3,000	Insas Plaza Sdn Bhd	7,852,400
MISC BERHAD	MISC	(34,300)	Employees Provident Fund Board	426,309,958
MISC BERHAD	MISC	(811,700)	Employees Provident Fund Board	426,442,158
MISC BERHAD	MISC	(97,900)	Employees Provident Fund Board	426,344,258
MK LAND HOLDINGS BERHAD	MKLAND	(8,700,000)	KASI A/L K L PALANIAPPAN	268,134,415
MNRB HOLDINGS BERHAD	MNRB	(255,200)	AMANAHRAYA TRUSTEES BERHAD - SKIM AMANAH SAHAM BUMIPUTERA	101,423,000
METRONIC GLOBAL BERHAD	MTRONIC	(8,000,000)	Ling Yew Kong	37,355,000
NESTLE (MALAYSIA) BERHAD	NESTLE	(32,200)	Employees Provident Fund Board	23,404,200
NESTLE (MALAYSIA) BERHAD	NESTLE	(1,200)	Employees Provident Fund Board	23,403,000
NESTLE (MALAYSIA) BERHAD	NESTLE	(5,000)	Employees Provident Fund Board	23,398,000
NYLEX (MALAYSIA) BERHAD	NYLEX	227,800	Pacific & Orient Berhad	85,356,388
NYLEX (MALAYSIA) BERHAD	NYLEX	227,800	Chan Thye Seng	85,356,388
NYLEX (MALAYSIA) BERHAD	NYLEX	227,800	Mah Wing Holdings Sdn Bhd	85,356,388
NYLEX (MALAYSIA) BERHAD	NYLEX	227,800	Mah Wing Investments Limited	85,356,388
ORIENTAL HOLDINGS BERHAD	ORIENT	2,100	Aberdeen International Fund Managers Limited	46,725,100
ORIENTAL HOLDINGS BERHAD	ORIENT	36,100	Aberdeen International Fund Managers Limited	46,761,200
ORIENTAL HOLDINGS BERHAD	ORIENT	2,100	Aberdeen Asset Management Asia Limited	54,222,700
ORIENTAL HOLDINGS BERHAD	ORIENT	36,100	Aberdeen Asset Management Asia Limited	54,258,800
ORIENTAL HOLDINGS BERHAD	ORIENT	2,100	Aberdeen Asset Management PLC and its subsidiaries	66,145,200
ORIENTAL HOLDINGS BERHAD	ORIENT	36,100	Aberdeen Asset Management PLC and its subsidiaries	66,181,300
PANASONIC MANUFACTURING MALAYSIA BERHAD	PANAMY	2,000	Mitsubishi UFJ Financial Group,Inc ("MUFG")	6,073,000
PANASONIC MANUFACTURING MALAYSIA BERHAD	PANAMY	700	Aberdeen Asset Management PLC and its subsidiaries	8,731,800
PANASONIC MANUFACTURING MALAYSIA BERHAD	PANAMY	2,000	Aberdeen Asset Management PLC and its subsidiaries	8,733,800
PANTECH GROUP HOLDINGS BERHAD	PANTECH	(1,200,000)	GL MANAGEMENT AGENCY SDN BHD	79,895,960
PANTECH GROUP HOLDINGS BERHAD	PANTECH	(1,200,000)	DATO’’ GOH TEOH KEAN	79,895,960
PANTECH GROUP HOLDINGS BERHAD	PANTECH	(1,200,000)	DATIN LEE SOCK KEE	79,895,960
PARKSON HOLDINGS BERHAD	PARKSON	(559,300)	Kumpulan Wang Persaraan (Diperbadankan) ("KWAP")	55,968,954
PASDEC HOLDINGS BERHAD	PASDEC	(1,750,200)	Guoco Group Limited	-
PASDEC HOLDINGS BERHAD	PASDEC	(1,750,200)	GuoLine Overseas Limited	-
PASDEC HOLDINGS BERHAD	PASDEC	(1,750,200)	GuoLine Capital Assets Limited	-
PASDEC HOLDINGS BERHAD	PASDEC	(1,750,200)	Hong Leong Company (Malaysia) Berhad	-
PASDEC HOLDINGS BERHAD	PASDEC	(1,750,200)	HL Holdings Sdn. Bhd.	-
PASDEC HOLDINGS BERHAD	PASDEC	(1,750,200)	Tan Sri Quek Leng Chan	-
PASDEC HOLDINGS BERHAD	PASDEC	(1,750,200)	GLL (Malaysia) Pte. Ltd.	-
PASDEC HOLDINGS BERHAD	PASDEC	(1,750,200)	Pembinaan Sri Jati Sdn. Berhad	-
PASDEC HOLDINGS BERHAD	PASDEC	(1,750,200)	Bedford Development Sdn. Bhd.	-
PASDEC HOLDINGS BERHAD	PASDEC	(1,750,200)	GuocoLand Limited	-
PASDEC HOLDINGS BERHAD	PASDEC	(1,750,200)	GuocoLand Assets Pte. Ltd.	-
PASDEC HOLDINGS BERHAD	PASDEC	(1,750,200)	Hong Realty (Private) Limited	-
PASDEC HOLDINGS BERHAD	PASDEC	(1,750,200)	Hong Leong Investment Holdings Pte. Ltd.	-
PASDEC HOLDINGS BERHAD	PASDEC	(1,750,200)	Kwek Holdings Pte. Ltd.	-
PASDEC HOLDINGS BERHAD	PASDEC	(1,750,200)	Kwek Leng Beng	-
PASDEC HOLDINGS BERHAD	PASDEC	(1,750,200)	Davos Investment Holdings Private Limited	-
PASDEC HOLDINGS BERHAD	PASDEC	(1,750,200)	Kwek Leng Kee	-
PASDEC HOLDINGS BERHAD	PASDEC	(1,750,200)	Quek Leng Chye	-
PASDEC HOLDINGS BERHAD	PASDEC	(1,750,200)	GuocoLand (Malaysia) Berhad	-
PUBLIC BANK BERHAD	PBBANK	(1,925,900)	Employees Provident Fund Board	461,040,381
		130,000
PETRONAS CHEMICALS GROUP BERHAD	PCHEM	950,000	Employees Provident Fund Board	1,012,690,800
PETRA ENERGY BERHAD	PENERGY	(1,241,000)	Lembaga Tabung Haji	22,299,412
PERISAI PETROLEUM TEKNOLOGI BHD	PERISAI	(2,005,200)	EMPLOYEES PROVIDENT FUND BOARD	61,793,000
PERISAI PETROLEUM TEKNOLOGI BHD	PERISAI	1,600,000	EMPLOYEES PROVIDENT FUND BOARD	63,393,000
PETRONAS DAGANGAN BHD	PETDAG	(80,000)	Employees Provident Fund Board	73,440,900
PETRONAS DAGANGAN BHD	PETDAG	41,900	Employees Provident Fund Board	73,482,800
PETRONAS GAS BERHAD	PETGAS	(44,000)	EMPLOYEES PROVIDENT FUND BOARD	266,966,400
		222,000
PETRONAS GAS BERHAD	PETGAS	(150,900)	KUMPULAN WANG PERSARAAN (DIPERBADANKAN)	104,779,600
		36,900
POS MALAYSIA BERHAD	POS	(300,000)	Employees Provident Fund Board	41,467,800
PRICEWORTH INTERNATIONAL BERHAD	PWORTH	(4,500,000)	Lee Kian Vui	9,648,150
SIME DARBY BERHAD	SIME	(454,400)	Employees Provident Fund Board	809,389,455
		1,249,800
SAPURAKENCANA PETROLEUM BERHAD	SKPETRO	(816,400)	Employees Provident Fund Board	679,584,689
		1,150,000
SKP RESOURCES BHD	SKPRES	(9,000,000)	DATO’’ GAN KIM HUAT	525,424,291
SKP RESOURCES BHD	SKPRES	(9,000,000)	RENOWN MILLION SDN BHD	175,246,075
S P SETIA BERHAD	SPSETIA	200,000	KUMPULAN WANG PERSARAAN (DIPERBADANKAN)	129,158,850
S P SETIA BERHAD	SPSETIA	1,850,000	Employees Provident Fund Board	128,666,230
S P SETIA BERHAD	SPSETIA	(671,200)	Mitsubishi UFJ Financial Group, Inc ("MUFG")	133,161,400
SUNWAY REAL ESTATE INVESTMENT TRUST	SUNREIT	(845,000)	Employees Provident Fund Board	318,304,300
		250,000
TASEK CORPORATION BERHAD	TASEK	5,000	Mitsubishi UFJ Financial Group, Inc ("MUFG")	14,851,759
TH PLANTATIONS BERHAD	THPLANT	1,480,200	Employees Provident Fund Board	47,855,400
TELEKOM MALAYSIA BERHAD	TM	249,900	Employees Provident Fund Board	480,700,300
TOP GLOVE CORPORATION BHD	TOPGLOV	(809,200)	Kumpulan Wang Persaraan (Diperbadankan)	-
TRIPLC BERHAD	TRIPLC	(6,488,295)	Gempur Likas Sdn Bhd	-
TRIPLC BERHAD	TRIPLC	(6,488,295)	Ho Kim Shing	-
TRIPLC BERHAD	TRIPLC	(6,488,295)	Md Zahary Bin Malek	-
TRIPLC BERHAD	TRIPLC	4,000,000	Minat Bakti Sdn Bhd	4,000,000
TRIPLC BERHAD	TRIPLC	4,000,000	Aidil Bin Abdul Aziz	4,000,000
TRIPLC BERHAD	TRIPLC	4,000,000	Ruzlan Bin Rahmat	4,000,000
UNITED MALACCA BERHAD	UMCCA	12,800	Aberdeen Asset Management PLC and its subsidiaries ("The Group&qu	29,152,050
UNITED MALACCA BERHAD	UMCCA	7,300	Aberdeen Asset Management Asia Limited	16,112,350
UNITED MALACCA BERHAD	UMCCA	7,300	Aberdeen International Fund Managers Limited	10,912,650
UNITED MALACCA BERHAD	UMCCA	5,500	Aberdeen Asset Management Sdn Bhd	12,989,700
UNITED MALACCA BERHAD	UMCCA	20,600	Mitsubishi UFJ Financial Group, Inc("MUFG")	29,139,250
UMS-NEIKEN GROUP BERHAD	UMSNGB	150,000	Yeo Guik Hiang	4,012,400
UOA DEVELOPMENT BHD	UOADEV	600,000	EMPLOYEES PROVIDENT FUND BOARD ("EPF BOARD")	79,828,200
UNITED PLANTATIONS BERHAD	UTDPLT	7,600	MITSUBISHI UFJ FINANCIAL GROUP. INC (MUFG)	24,148,000
UNITED PLANTATIONS BERHAD	UTDPLT	19,800	Aberdeen Asset Management PLC and its Subsidiaries	24,167,800
WAH SEONG CORPORATION BERHAD	WASEONG	83,200	Employees Provident Fund Board	45,142,433
WCT BERHAD	WCT	(2,500,000)	Kumpulan Wang Persaraan (DiPerbadankan)	64,933,210
WCT BERHAD	WCT	(300,000)	Employees Provident Fund Board	123,708,430
WHITE HORSE BERHAD	WTHORSE		Teo Kim Tay	12,559,015
WHITE HORSE BERHAD	WTHORSE		Teo Kim Lap	12,533,027
WHITE HORSE BERHAD	WTHORSE		Teo Swee Teng	13,498,593
YTL CORPORATION BERHAD	YTL	(3,312,300)	EMPLOYEES PROVIDENT FUND BOARD	789,297,047
YTL POWER INTERNATIONAL BHD	YTLPOWR	(3,000,000)	EMPLOYEES PROVIDENT FUND BOARD	586,482,916