This is One of the Best Insider Buying Indicators in the World

This is One of the Best Insider Buying Indicators in the World
By Braden Copeland, editor, Inside Strategist
December 14, 2009

When I sift through insider buying information, there's one type that really grabs my attention...

It's when the chief financial officer (CFO) of a company is a large and regular buyer of his company's stock.

Why is this sort of buying so significant? It's simple. The CFO lives, eats, and breathes his company's finances. He knows the strength of his company's balance sheet. He knows how healthy his company's cash flow is. He knows what his company's future projections are.

Making sure the company has the money it needs to execute its business plan is his responsibility. Every day, it's the CFO's job to look at the numbers and understand exactly what's happening.

That's why few insiders at a public company understand its stock price better than the CFO. He, more than anyone else, can always tell if shares are cheap... if they are a screaming buy.

Of course, the CFO isn't always able to buy when shares are cheap.

For one thing, a company typically pays the CFO barely 60% of what it pays the CEO. In 2008, the average CEO pay was $346,000... The average CFO pay was $214,000. For the CFO, investing a chunk of his personal money in the company's stock can be a stretch. At the right time, he just might not have it.

And a CFO isn't usually the type to put all of his eggs in one basket. He's often the conservative accountant type. He's not going to concentrate his risk. Investment diversification is almost part of his genetic code.

Usually, only a very special situation will convince a CFO to invest his savings in the same company he's already investing most of his life. And that special situation is when shares are cheap and carry little risk.

Ask yourself: Would the CFO – the guy who knows more about his company's finances than anyone else – buy his company's stock if he thought (1) he was overpaying, (2) he might lose his money, or most of all, (3) he wouldn't get a fantastic return on his investment? It's highly unlikely.

So when the CFO buys, it pays to take notice. And when a CFO buys regularly, I really stop and investigate.

The Best Time to Trade Cash for Stocks

When Insider Selling Matters

There's a lot of "secrets" marketed in the financial advisory business. Many of them aren't secrets at all. Many of them won't help you get an edge in the market.

But watching for big CFO buys is one of the great ones I've found in my career. They don't come around often, but when they do, it's a sign you have a low-risk, high-reward trade on your hands.

Good trading,

Braden Copeland

P.S. This week, I found the perfect CFO buying situation. This CFO has bought his company's shares twice this year. The first time he bought, the stock doubled in three months. The stock has backed off, and now he's buying again. I think this CFO's stock is one of the best low-risk, high-reward trades in the world right now. Click here to learn more with a trial subscription to Inside Strategist.

SUPER tax OUTRAGE: Government salaries exploding
These tax facts should make your blood boil.

Trading expert: Don't buy gold or oil, buy these 2 commodities instead
You probably don't know one of them is the 2nd most traded commodity in the world.

The next sovereign debt crisis is happening
This European country is falling apart...

•	Oil sees six-year record tumble... eight straight days of declines carry crude below $70.
•	Aluminum giant Alcoa spikes 11.5% last week on JPMorgan upgrade.
•	10-year yield rockets higher... rate jumps from 3.21% to 3.54% in two weeks.
•	Disney rallies on... entertainment giant adds 4% last week, breaking out to fresh highs.

	Last	Change	52-Wk
S&P 500	1109.30	+1.45%	+27.03%
Oil (USO)	40.29	+2.99%	-12.75%
Gold (GLD)	111.63	+1.72%	+52.29%
Silver (SLV)	18.01	+5.01%	+92.41%
U.S. Dollar	75.37	+0.68%	-13.15%
Euro	1.49	-0.70%	+17.54%
VIX	22.89	-2.01%	-65.48%
HUI	475.53	+3.26%	+155.07%
10-Year Yield	3.33%	-0.10	-0.37

Advertisement

Company	Sym	Industry
IBM	IBM	computers
Altria	MO	cigarettes
Duke Energy	DUK	utilities
Kinder Morgan	KMP	pipelines
Kubota	KUB	machinery
Yanzhou Coal	YZC	coal mining
Clorox	CLX	cleaning products
Plum Creek	PCL	timber REIT
ONEOK	OKE	utilities
NSTAR	NST	utilities
UnitedHealth	UNH	health insurance
TransCanada	TRP	utilities
American Electric	AEP	utilities
Marvell Tech	MRVL	semiconductors
CPFL Energia	CPL	utilities
Cablevision	CVC	cable TV
LAN Airlines	LFL	airlines
Northeast Utilities	NU	utilities
Wimm-Bill-Dann	WBD	food products
Verizon	VZ	telecom
Philips	PHG	electronics
Kellogg	K	packaged foods
PG & E	PCG	utilities
Progress Energy	PGN	utilities
Xcel Energy	XEL	utilities
DTE Energy	DTE	utilities
CenterPoint	CNP	utilities
Church & Dwight	CHD	cleaning products
Autoliv	ALV	auto parts
Coca-Cola	KO	soft drinks
MedcoHealth	MHS	pharma
General Mills	GIS	packaged foods
Starbucks	SBUX	coffee
Edison Intl	EIX	utilities
CIGNA	CI	health insurance
Southwest Airlines	LUV	airlines
Wisconsin Energy	WEC	utilities
Terra Industries	TRA	fertilizer
Sybase	SY	software
Walt Disney	DIS	entertainment
WellPoint	WLP	health insurance
Enterprise	EPD	oil & gas drilling
Precision	PCP	metal fabrication
Republic Services	RSG	garbage
L-3	LLL	defense
J. M. Smucker	SJM	packaged foods
SCANA	SCG	utilities
Nisource	NI	utilities
TECO Energy	TE	utilities
3M	MMM	conglomerate
Canadian Natl	CNI	railroads
Enbridge	ENB	pipelines
Enersis	ENI	utilities
Quest Diagnostics	DGX	medical research
Canadian Pacific	CP	railroads
Scripps Networks	SNI	TV programming
R.R. Donnelley	RRD	printing
Marvel Ent	MVL	movies
Bristol-Myers	BMY	Big Pharma
General Dynamics	GD	Big Defense
Sysco	SYY	wholesale food
ConEd	ED	utilities
McGraw-Hill	MHP	publishing
Smith & Nephew	SNN	medical devices
Rockwell Auto	ROK	industrial equip
Magellan	MMP	pipelines
Pinnacle West	PNW	utilities

Company	Sym	Industry
Corinthian Colleges	COCO	for-profit ed
Isis Pharma	ISIS	pharma
Penn Millers	PMIC	insurance
Alon USA Energy	ALJ	oil & gas refining
Kingsway Financial	KFS	insurance

Weekend Edition: When I'll decide to Become Poor
December 12, 2009

Congrats. Now Don't Forget to Book Your Profits...
December 11, 2009

The Government Is About to Destroy the Market
December 10, 2009

Commodity Q&A: Your Questions on the One Alternative That Works
December 9, 2009

To Make More Money, Ask Yourself This One Question
December 8, 2009