In this current stock market environment, various unloved stocks are now trading at very attractive levels – so much so that we’ve seen an increase in activity from various private equity (PE) firms looking to capitalize on turnaround stories which are becoming more common.
In this article, I’m going to discuss why such stocks may turn out to be great investments and why investors should pay attention to these insider transactions.
Private equity investments in any company that make up 10% or more of outstanding shares needs to be disclosed and investors have access to this information in the company’s quarterly disclosures.
These transactions indicate significant value maybe be created via activist investors, and also signal to the market that some pretty smart investors see significant amount of unlocked potential with a given company. Paying attention to such transactions is important, as these data provide a great deal of insight into the potential of a stock for undecided investors.
As always, please remember to consult with a certified financial advisor into your own homework before making investing decisions. Insider buying and selling activity is not necessarily indicative of the future performance of a given company’s stock price, and insiders regularly buy or sell positions in companies they own or manage for reasons other than expectations of future stock price performance.
Analyzing insider transactions in a given stock is one tool of many to gain pertinent information to assist in investment decision making.
