The Insider Buying Paradox | What Five Years of Data Actually Tell Us

When executives buy their own company's stock, it's widely interpreted as a bullish signal—insiders with firsthand knowledge betting on undervaluation. New research from Verity analyzing 1,400 insider purchases across S&P 500 companies over five years reveals a more nuanced picture: while share prices climbed a median 2% in the month following insider purchases, only 15% of stocks fully recovered their prior losses. This analysis examines the methodology behind these findings and what retail investors should actually take away.

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