One of the things that many investors look for in a company is high insider ownership. This seems to indicate that insiders, those who probably know the company best, are confident of its future success. While not a perfect indicator, it often is a characteristic of stocks that become 100-baggers or better.
The flip side of this is that companies where the insiders own less than 10% of the common stock are liable to be poor long-term investments, though profitable short term trades are not impossible.
This is the practice of buying or selling shares of a company's stock (or some other security) based on knowledge that was acquired as an officer of the company, and that is not available to the general public. This is illegal.
Related Fool Articles
Recent Mentions on Fool.com
- Walt Disney Co Sheds Light on Its Major Movie Pipeline: What You Need to Know
- Ignore The Juicy Swipes, Tesla's Elon Musk Is Excited About Apple Car
- Why Intel Has Nearly Zero Chance of Winning Apple Inc.'s A-Chip Business Anytime Soon
- Can Shake Shack Bounce Back From Last Week's 12% Drop?
- How American Express, Visa, and MasterCard Set Merchant Fees
- 3 Great Energy Dividend Stocks That Aren't MLPs