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This is One of the Best Insider Buying Indicators in the World

By Braden Copeland, editor, Stansberry's Investment Advisory
Monday, December 14, 2009

When I sift through insider buying information, there's one type that really grabs my attention...
 
It's when the chief financial officer (CFO) of a company is a large and regular buyer of his company's stock.
 
Why is this sort of buying so significant? It's simple. The CFO lives, eats, and breathes his company's finances. He knows the strength of his company's balance sheet. He knows how healthy his company's cash flow is. He knows what his company's future projections are.
 
Making sure the company has the money it needs to execute its business plan is his responsibility. Every day, it's the CFO's job to look at the numbers and understand exactly what's happening.
 
That's why few insiders at a public company understand its stock price better than the CFO. He, more than anyone else, can always tell if shares are cheap... if they are a screaming buy.
 
Of course, the CFO isn't always able to buy when shares are cheap.
 
For one thing, a company typically pays the CFO barely 60% of what it pays the CEO. In 2008, the average CEO pay was $346,000... The average CFO pay was $214,000. For the CFO, investing a chunk of his personal money in the company's stock can be a stretch. At the right time, he just might not have it.
 
And a CFO isn't usually the type to put all of his eggs in one basket. He's often the conservative accountant type. He's not going to concentrate his risk. Investment diversification is almost part of his genetic code.
 
Usually, only a very special situation will convince a CFO to invest his savings in the same company he's already investing most of his life. And that special situation is when shares are cheap and carry little risk.
 
Ask yourself: Would the CFO – the guy who knows more about his company's finances than anyone else – buy his company's stock if he thought (1) he was overpaying, (2) he might lose his money, or most of all, (3) he wouldn't get a fantastic return on his investment? It's highly unlikely.
 
So when the CFO buys, it pays to take notice. And when a CFO buys regularly, I really stop and investigate.
 
There's a lot of "secrets" marketed in the financial advisory business. Many of them aren't secrets at all. Many of them won't help you get an edge in the market.
 
But watching for big CFO buys is one of the great ones I've found in my career. They don't come around often, but when they do, it's a sign you have a low-risk, high-reward trade on your hands.
 
Good trading,
 
Braden Copeland




In The Daily Crux
Market Notes
Oil sees six-year record tumble... eight straight days of declines carry crude below $70.
 
Aluminum giant Alcoa spikes 11.5% last week on JPMorgan upgrade.
 
10-year yield rockets higher... rate jumps from 3.21% to 3.54% in two weeks.
 
Disney rallies on... entertainment giant adds 4% last week, breaking out to fresh highs.
Market Watch
Symbol Price
Change
52-Wk
S&P 500 1221.53 +1.3% +10.1%
Oil 38.31 +1.4% -0.6%
Gold 138.07 +2.1% +16.3%
Silver 28.60 +2.4% +53.6%
US-Dollar 80.67 -0.8% +8.1%
Euro 1.32 +0.6% -12.1%
Volatility 18.01 -7.1% -19.8%
Gold Stocks 581.56 +3.0% +17.0%
10-Year Yield 3.02 +0.7% -10.7%

World ETFs
Symbol Price
Change
52-Wk
USA 122.89 +0.3% +11.3%
Canada 30.50 +0.2% +16.2%
Russia 21.94 +1.4% +18.1%
India 37.85 +0.3% +22.3%
Israel 16.69 +1.3% +10.8%
Japan 10.64 +0.6% +6.5%
Singapore 13.73 -1.1% +18.8%
Taiwan 14.78 +0.4% +19.2%
S. Korea 57.31 +1.3% +23.4%
S. Africa 71.87 +1.4% +28.2%
China 44.42 -1.4% -0.6%
Lat.America 53.17 +0.7% +8.4%

Sector ETFs
Symbol Price
Change
52-Wk
Oil Service 137.59 +1.0% +18.9%
Big Pharma 64.14 +0.0% -3.2%
Internet 72.07 -0.1% +23.4%
Semis 16.22 +1.2% +29.4%
Utilities 31.28 +0.2% +1.5%
Defense 18.52 +0.1% +10.6%
Nanotech 10.03 +0.4% +1.6%
Alt. Energy 10.08 +1.3% -3.3%
Water 18.49 +1.0% +14.5%
Insurance 16.14 +0.4% +21.1%
Biotech 20.54 -0.2% +28.1%
Retail 19.70 +0.3% +30.2%
Software 24.79 +0.8% +25.9%
Big Tech 53.87 +0.3% +22.7%
Construction 13.10 +0.9% +15.7%
Media 13.64 +0.5% +26.0%
Consumer Svcs 67.39 +0.2% +24.5%
Financials 55.04 +0.3% +7.4%
Health Care 64.30 +0.1% +2.0%
Industrials 63.54 +0.5% +21.0%
Basic Mat 74.35 +1.1% +25.3%
Real Estate 55.32 +0.1% +25.0%
Transportation 91.77 +0.7% +26.9%
Telecom 22.59 +0.5% +17.8%

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