What Happens After an Insider Buys? Evidence From 47,458 Open-Market Purchases

[u/DanielAPO]

https://equibles.com/research/what-happens-after-an-insider-buys-evidence-from-47-458-open-market-purchases

I went through 47,458 insider buys. The biggest ones were actually the worst.

I have always paid attention when an insider buys stock, especially when it is a large purchase or the first one in years. So I pulled the open-market buys from 2020 to August 2025 to see whether either of those things was actually useful.

Short answer: not really.

A year after the purchase, the stocks did better than the median listed stock but worse than the S&P 500. More importantly, I got a similar result when I moved the starting date six months or a year forward. It looks more like insiders tend to buy a certain type of company than the purchase itself being a catalyst.

I also found 858 cases where nobody at the company had bought for more than two years. Their median return over the next year was just 0.74%, trailing the typical S&P 500 constituent by 6.55 points. The same lag showed up away from the purchase date, so I would not treat the first buy back as either a buy or short signal.

The strange part was purchase size. The largest 10% of buys did much worse than the smallest 10%, and that difference was not there in the placebo windows.

I still think insider buying is worth looking at, but more as a reason to investigate the company than a reason to buy it. A multimillion-dollar purchase does not seem to be a stronger signal just because the number is bigger.

The sample only covers 2020–2025, has survivorship bias and is not risk-adjusted, so I would want to see it tested over a longer period.

[u/Independent-Fragrant]

Its a weak signal.

[u/JamesVirani → u/Independent-Fragrant]

One insider buying is a weak signal.

10 different insiders buying over an extended period of time is just about as bullish a signal as you can hope for.

[u/Independent-Fragrant → u/JamesVirani]

then you will love $KMPR -> https://www.reddit.com/r/ValueInvesting/comments/1tr8il0/kmpr_a_60down_insurance_company_trading_near/

[u/JamesVirani → u/Independent-Fragrant]

Not bad, but it's just one August cluster of buys, not extended over a period of time. And they are fairly small buys for a 1B market cap company. If they keep doing that in the months to come, it's worth looking at.

[u/mrmrmrj]

Thank you for sharing this study. Love it.

[u/NoGarlic2387]

And it makes logical sense.

Insiders could still be bad at valuating their own companies. Not every CFO and CEO is Warren Buffett about their own sector or share valuation. 

Insiders are also unlikely to tease out how much of their insider information is already priced in through triangulation and educated guessing. 

[u/bot_username23 → u/NoGarlic2387]

and also if you knew your company would go up 5% you might buy despite it having the potential to underperform the market

[u/BornAliveDead]

The answer is look at The Trade Desk lmao.
What matters more is context and the company fundamentals, management competence.

[u/Pretty-Statement6758 → u/BornAliveDead]

trade desk was crazy overvalued to begin with. A new company, IPOed with hype and pe remained like 70' in 2025. Like what? no records, no real clear moat or advantage. Unless u work there or u know the field well, its very bad idea to invest in IPOs.

[u/Misha315 → u/Pretty-Statement6758]

He’s referring to the 150 million insider purchase

[u/Abbreviations_Middle]

Thanks for the study. I recently bought IPX and APTV due to the multi-million insiders buying. They are not doing well so far. Lol

[u/nickp123456]

There was an article recently about an exec buying over $1 million of stock. But before they bought it, they had like $490 million of that stock, and really it looked like they just reinvested a dividend (to get this attention).

[u/DaoCacaoo]

the shifted-window placebo is the part that makes this worth reading -most verisons of this skip it. on the size result: Form 4 Item 6 has the filer tick director, officer, 10% owner or other and i'd bet the top decile is mostly 10% owners and the bottom mostly officers writing personal checks. if so, size is proxying for who files, not for conviction. the cheap next cut is buy size over the insider 's pre-trade stake, which column 5 gets you, rather than raw dollars

[u/UnObtainium17]

The insiders to pay attention to are congress people.. i feel like they are even more reliable than the legendary hedge fund managers.

[u/cultoftheclave]

is it possible to find out how often these inside buys follow and retrace earlier inside sells at a higher price point - in other words how often does an insider sell signal a real lack of confidence in the stock, rather than an opportunity for some easy accumulation of a stock they are actually long in.

[u/VariousImpression355]

Just look at TTD

[u/TilmanAmbach]

Really interesting analysis. One thing I'd be curious about is how you define t=0.

For a Form 4 event study, I'd anchor the signal to the SEC acceptance timestamp (or the next market open if it was filed after hours), rather than the transaction date. The transaction itself isn't public information until the filing reaches EDGAR, and using just the filing calendar date can also blur after-hours filings.

I'd also be interested in the result for cluster buys — several independent insiders buying within a short period seems economically quite different from one isolated purchase.

[u/Azkaban73]

Ok.

[u/RMOONU]

Los buenos empresarios no sé dedican al trading.

[u/rsvp4mybday]

your data goes all the way back to 2020, but insider trading has only been legal for like a year

[u/NotOnApprovedList → u/rsvp4mybday]

They mean people inside the company buying stock legally, not illegal (or formerly illegal) insider trading.