The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK ( Insider Monkey) -- Insider Monkey provides free insider trading and hedge fund holdings data. We believe insiders have an edge over other investors because insiders know more about their companies than do outsiders. That's why insiders aren't allowed to trade based on material non-public information.

Most insiders don't break the law, but some insiders push the envelope and trade on information that are in the gray area. Other insiders are great analysts and they know when to trade by using public information, which is perfectly legal. So it may be possible to beat the market by imitating all insiders' purchases. However, insider trading is generally not a profitable strategy unless several insiders are purchasing at around the same time. Academic studies have shown that insider purchases outperform the index fund by more than 7% per year when there are several insiders buying.

The last time we wrote about the stocks that insiders are buying like crazy the following stocks made the list:

1. TranSwitch Corp ( TXCC): This stock lost 18.4% of its value since we wrote our article. The S&P 500 index lost only 3.1% since then.

2. Town Sports ( CLUB): CLUB gained 25.2% since Apr 24. We reported several insider purchases in this stock and recommended it in Nov. 2010. It was trading at $3 per share then. Today, the stock is close to $7. Is this amazing performance a coincidence? You bet it is. The only other stock we ever recommended on this blog was AMN Healthcare Services ( AHS) and that stock went up by only 59.6%. Interestingly, we published both articles the same day.

3. Ligand Pharma ( LGND): Ligand went up 0.3% since April 24.

4. Exar ( EXAR): EXAR returned 4.9% since we published our article.

5. Central European Distribution ( CEDC): CEDC returned 10.2% since we published our article.

As you can see, these stocks as a group managed to beat the S&P 500 index by more than 7 percentage points. We have published eight to nine articles in this format and this is what we have observed in many cases. The stocks bought by several insiders seem to outperform the market. Of course, there are no guarantees and there will be extended periods where this strategy will underperform the market. That's a certainty. We don't accept any responsibility for your losses, but we will be glad if you attribute your gains to us.

Here are the stocks with significant insider buying:

1. Beazer Homes ( BZH)

2. Kodak ( EK)

3. Ultralife ( ULBI)

4. Brown Shoe ( BWS)

5. Pixelworks ( PXLW)

6. Sunstone Hotel Investors ( SHO)

7. Biolase Technology ( BLTI)

8. Town Sports ( CLUB)

This article was originally published on Insider Monkey.