Risks to Consider: These stocks have stumbled after insiders were bullish, so it pays to deeply research what has transpired since to ensure that the insider-induced investment thesis still applies.
Action to Take: Many stocks move higher after insiders file their transactions with the Securities and Exchange Commission. It often pays to let the insider-inspired bump pass and see if shares pull back. Indeed, it's rarely wise to pay more for a stock than insiders did, as they may end up being sellers by the time you're ready to buy. Conversely, when shares slump after insiders buy, your purchase may be followed by more buying from those insiders. You may find that following this path for any of the three stocks I mentioned above pays off with substantial gains.
>>To see these stocks in action, visit the 3 Stocks to Buy for Less Than What Insiders Paid portfolio on Stockpickr.
David Sterman does not personally hold positions in any securities mentioned in this article.StreetAuthority LLC owns shares of TIE, in one or more if its "real money" portfolios.
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