When Insiders Make Purchases, It Is Wise to Take Notice

02/22/2016 7:00 am EST

Focus: STOCKS

Only nine companies—within the 30 components of the DJIA—have experienced significant insider buying over the trailing six-month period, so the staff at DividendChannel.com studies the chart showing the one-year performance of the shares of one of said nine, versus its 200-day moving average.

The officers and directors of a company tend to have a unique inside view into the business, so when these insiders make purchases, investors are wise to take notice. Presumably the only reason for a company insider to choose to take their hard-earned cash and use it to buy stock in the open market, is that they expect to make money, maybe they find the stock very undervalued, or maybe they see exciting progress within the company, or maybe both. Within the 30 components of the Dow Jones Industrial Average, only nine companies have experienced such buying over the trailing six-month period, one of which was Caterpillar, Inc. (CAT), where an investment totaling $217.7K was made by Group President Denise C. Johnson.

chart
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Johnson's average cost works out to $62.20/share. Shares of Caterpillar, Inc. were changing hands at $66.32 at last check, trading off about 1.5% on last Thursday. The chart below shows the one-year performance of CAT shares, versus its 200-day moving average:

chart
Click to Enlarge

Looking at the chart above, CAT's low point in its 52-week range is $56.36 per share, with $89.62 as the 52-week high point, that compares with a last trade of $66.32. To see the second chart and to read the entire article, click here…

By the Staff of DividendChannel.com

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