Insider buying is on the rise at these 7 mid-cap stocks

James Dennin, Kaptiall: Insider buying is on the rise at these 7 mid-cap stocks. Are their employees right to be bullish on their companies' prospects?

Insider trading sounds pretty sinister. But there's a good chance it could soon get a lot more common, thanks in part to activist investor Bill Ackman. 

A recent investment by Ackman's fund is calling into question the entire method for determining what exactly is legal insider trading and what isn't. In laws that date back to the 1934 Securities Exchange Act, insider trading has always been perfectly acceptable as long as the information is available to the general public. 

Read more from Kapitall: These 4 auto parts stocks all posted growing profits last quarter

However, Ackman recently tested those laws in a bid to take over the company Allergan (AGN). The controversy stems from the fact that Ackman purchased a number of Allergan shares before announcing plans to partner with Valeant (VRX) in a hostile takeover bid. 

Since the fund already had a large stake in the firm, it was able to profit heavily from the announcement. 

The act itself is far from illegal. But as  Dealbook pointed out, it really only " feels" like insider trading, as the information came to Ackman legally. Anger over the trade has also caused a backlash from those who point out that insider trading laws have never worked, anyway. 

That's because information is, as the article points out, incredibly mercurial. Relevent information will usually find the people willing to pay for it. That's kind of just the way it is.

With that in mind, we decided to screen for stocks with spikes in insider buying. Since small cap stocks have suffered lately and since insider buying doesn't really affect large-caps much, we decided to focus on mid-caps. 

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