When company insiders buy stock, investors tend to take notice. That's because insiders - including a company's officers and directors, as well as any shareholders with a stake of 10% or more - are generally assumed to have a much better understanding of the company's current position and strategic vision to drive growth, as well as any immediate pitfalls that could derail its prospects, than the average investor.
To help ensure transparency, insider buying and selling activity can be accessed through publicly available Form 4 filings. Not all of these transactions are particularly meaningful, from an investing perspective; for example, many insider transactions are executed as part of compensation agreements. But when a company insider buys shares with their own money, it's often a high-profile vote of confidence that's worth paying attention to.
