{"id":107706,"date":"2017-06-19T10:35:39","date_gmt":"2017-06-19T14:35:39","guid":{"rendered":"http:\/\/countingpips.com\/?p=107706"},"modified":"2017-06-19T07:12:28","modified_gmt":"2017-06-19T11:12:28","slug":"a-strange-trail-of-breadcrumbs","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2017\/06\/a-strange-trail-of-breadcrumbs\/","title":{"rendered":"A Strange Trail of Breadcrumbs"},"content":{"rendered":"<div id=\"inves-1824979978\" class=\"inves-below-title-posts inves-entity-placement\"><div id =\"posts_date_custom\"><div align=\"left\">June 19, 2017<\/div><hr style=\"border: none; border-bottom: 3px solid black;\">\r\n<\/div><\/div><p>By <a href=\"http:\/\/WallStreetDaily.com\/\"><u>WallStreetDaily.com<\/u><\/a> <img loading=\"lazy\" decoding=\"async\" class=\"attachment-home-th size-home-th wp-post-image\" style=\"display: block; margin-bottom: 5px; clear: both;\" src=\"https:\/\/s3.amazonaws.com\/wallstreetdailywebsite\/wp-content\/uploads\/2017\/06\/0617_insiders_feature.jpg\" sizes=\"auto, (max-width: 580px) 100vw, 580px\" srcset=\"https:\/\/s3.amazonaws.com\/wallstreetdailywebsite\/wp-content\/uploads\/2017\/06\/0617_insiders_feature.jpg 580w, https:\/\/s3.amazonaws.com\/wallstreetdailywebsite\/wp-content\/uploads\/2017\/06\/0617_insiders_feature-300x155.jpg 300w\" alt=\"A Strange Trail of Breadcrumbs\" width=\"580\" height=\"300\" \/><\/p>\n<ul>\n<li>The technology craze will test your IQ.<\/li>\n<li>Don\u2019t value sizzle over steak.<\/li>\n<li>Insiders always leave breadcrumbs.<\/li>\n<li><strong><a href=\"https:\/\/pro.agorafinancial.com\/m\/696144\" target=\"_blank\" rel=\"noopener\">Also recommended: Trump\u2019s \u201cspecial resource\u201d revealed.<\/a><\/strong><\/li>\n<\/ul>\n<hr \/>\n<p><img decoding=\"async\" style=\"float: left; max-width: 85px;\" src=\"https:\/\/duip7hn7nchpo.cloudfront.net\/editor-circle-louis-basenese.jpg\" alt=\"Louis Basenese\" \/>With the relentless advancement of mind-blowing technologies like gene editing, artificial intelligence and smart dust \u2014 more practical technologies are becoming underappreciated.<\/p>\n<p>However, it\u2019s a grave error to value a technology\u2019s sexiness above ROI.<\/p>\n<p>Take the light-emitting diode (LED) build-out, for example.<\/p>\n<p>The LED industry is presently worth upward of $30 billion, with no ceiling in sight.<\/p>\n<p>Think about how many grocery stores, malls, athletic facilities college dorms still use outdated incandescent lighting systems. Tons!<\/p><div id=\"inves-123494851\" class=\"inves-in-content inves-entity-placement\"><hr style=\"border: 1px solid #ddd;\">\r\n<div id=\"inpost_ads_header\">\r\n<p style=\"font-size:10px; float:left; color:#666;\">Free Reports:<\/p><\/div>\r\n<div id=\"inpost_ads\"> \r\n<p style=\"font-size:15px; float:left;\"><a href=\"https:\/\/goo.gl\/1ApBOV\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/investmacro.com\/wp-content\/uploads\/2018\/06\/graph_techs_PD.png\" align=\"left\" width=\"80\"  height=\"55\"\/><\/a>\r\n\t     <a href=\"https:\/\/goo.gl\/1ApBOV\"><b><u>Get Our Free Metatrader 4 Indicators<\/u><\/b><\/a> - Put Our Free MetaTrader 4 Custom Indicators on your charts when you join our Weekly Newsletter<\/p><br><br>\r\n<br>\r\n<br>\r\n<p style=\"font-size:15px; float:left;\"><a href=\"https:\/\/goo.gl\/f3RrHX\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/investmacro.com\/wp-content\/uploads\/2019\/01\/cot_pie_80.png\" align=\"left\" width=\"80\"  height=\"55\"\/><\/a>\r\n\t    <a href=\"https:\/\/goo.gl\/f3RrHX\"><b><u>Get our Weekly Commitment of Traders Reports<\/u><\/b><\/a> - See where the biggest traders (Hedge Funds and Commercial Hedgers) are positioned in the futures markets on a weekly basis.<\/p><br><br>\r\n<\/div>\r\n<hr style=\"border: 1px solid #ddd;\">\r\n<br><\/div>\n<p>Yet carrying the associated energy costs forward in today\u2019s world is virtually impossible.<\/p>\n<p>LED demand, thereby, is unquestionable.<\/p>\n<p>So even though they aren\u2019t sexy \u2014 LED companies like Keysight Technologies (NYSE: KEYS) could outperform even the most insatiable new technologies.<\/p>\n<p>It just so happens that a top insider has been loading up on KEYS shares.<\/p>\n<p>Director Charles J. Dockendorff recently acquired $499,470 of the company\u2019s stock, which pushes his open position on Keysight Technologies to $1,958,558.<\/p>\n<p>Amazing conviction, right?<\/p>\n<p>Yet before we rush to invest alongside Dockendorff, let\u2019s do a deeper dive.<\/p>\n<p>Is it possible that major insider purchases can be viewed bearishly?<\/p>\n<p>I asked my senior analyst, Martin Hutchinson, to tackle the merits of insider buying\/selling.<\/p>\n<p>As it turns out, transactions must be measured on a case-by-case basis.<a name=\"video\"><\/a><\/p>\n<p>Hutch\u2019s full report is below.<\/p>\n<p>Ahead of the tape,<\/p>\n<p>Louis Basenese<br \/>\nChief Investment Strategist, <em>Wall Street Daily<\/em><\/p>\n<hr \/>\n<p><script src=\"https:\/\/fast.wistia.com\/assets\/external\/E-v1.js\" async><\/script><\/p>\n<div class=\"wistia_responsive_padding\" style=\"padding: 57.0% 0 0 0; position: relative;\">\n<div class=\"wistia_responsive_wrapper\" style=\"height: 100%; left: 0; position: absolute; top: 0; width: 100%;\">\n<div class=\"wistia_embed wistia_async_gfri9kfgav videoFoam=true\" style=\"height: 100%; width: 100%;\"><\/div>\n<\/div>\n<\/div>\n<hr \/>\n<p><strong>Question:<\/strong> Martin, you\u2019ve agreed to help us compile a library of the most important investment catalysts on Earth.<\/p>\n<p>These are all baseline concepts that every investor needs to know, and today we\u2019ll be discussing insider trading, the legal kind of insider trading, and how it can impact the stock price.<\/p>\n<p>Let\u2019s jump right in, Martin. Tell us why are insiders so important to the market?<\/p>\n<p><strong>Martin Hutchinson:<\/strong> Company insiders buying or selling is often a good indicator of what they think of the company\u2019s prospects, but you have to remember that doesn\u2019t mean they\u2019re right about the company\u2019s prospects.<\/p>\n<p>And also, if they\u2019re trading on nonpublic information, in other words, something they know and the public doesn\u2019t, then their trading could be illegal. It\u2019s a very gray area.<\/p>\n<p><strong>Question:<\/strong> So you\u2019re suggesting right at the top that it\u2019s not a be-all-end-all signal when a company insider buys shares of stock because they actually might be wrong about their own company.<\/p>\n<p><strong>Martin Hutchinson:<\/strong> Very easily, yes. They could be easily wrong about the company\u2019s prospect.<\/p>\n<p><strong>Question:<\/strong> Wow, a CEO being wrong about the company\u2019s prospects. I guess we have to be careful of that.<\/p>\n<p><strong>Martin Hutchinson:<\/strong> Not all CEOs are competent.<\/p>\n<p>Let\u2019s start with the definition of insider. Legally, it\u2019s a director, a senior officer or an owner of 10% of a company\u2019s shares.<\/p>\n<p>There\u2019s the Nasdaq website, which gives information on insider purchases and certain sales. That\u2019s how you can find out about it.<\/p>\n<p><strong>Question:<\/strong> OK, so our viewers could go to <a href=\"http:\/\/www.nasdaq.com\/quotes\/sec-insider-form-4.aspx\" target=\"_blank\" rel=\"noopener\">NASDAQ.com<\/a>, navigate and find a list that updates daily?<\/p>\n<p><strong>Martin Hutchinson:<\/strong> It updates daily, yes.<\/p>\n<p><strong>Question:<\/strong> And what are some reasons that an insider may buy shares of their own company?<\/p>\n<p><strong>Martin Hutchinson:<\/strong> Well, there are a number of possibilities.<\/p>\n<p>They may think the market undervalues their company, or they\u2019re confident about the company\u2019s prospects.<\/p>\n<p>They may know about a development, for example, a takeover or a hot new product that will boost the share price. That\u2019s the one that can get illegal fairly quickly.<\/p>\n<p>Or they just got a cash flow, a bonus or a legacy or are deploying capital. Obviously, that has something to do with them, not the company.<\/p>\n<p>And if they\u2019re wealthy and they\u2019re a large shareholder, they may be planning to do a leveraged buyout and take the company private, and that\u2019s obviously interesting as well.<\/p>\n<p><strong>Question:<\/strong> So some of those could help us as investors. Others not so much?<\/p>\n<p><strong>Martin Hutchinson:<\/strong> That\u2019s right, and then you can look at why insiders might sell.<\/p>\n<p>Generally, they\u2019ll have stock options, so they want to balance their portfolio as they exercise the options. They\u2019ll sell some of the shares.<\/p>\n<p>Or they know future sales and earnings will be weak, and that can be doubtfully legal.<\/p>\n<p>They might have cash needs for family and housing, etc. We\u2019ve all got those problems. Two kids going to college simultaneously, that kind of thing.<\/p>\n<p>Or they\u2019re bearish on the overall market, which is sometimes the case.<\/p>\n<p><strong>Question:<\/strong> Continue on. What else? Share some more of your insider wisdom with us, please.<\/p>\n<p><strong>Martin Hutchinson:<\/strong> So to answer the question of what we should do as investors, I think we should take big insider purchases and sales into account in making investment decisions.<\/p>\n<p>Purchases should be one additional positive, but never buy only because of insider purchases, because insiders can be wrong or they could be doing something illegal.<\/p>\n<p>Insider sales can be a useful warning signal of trouble ahead if you own the stock already. So if you suddenly see three or four directors selling, that can be significant.<\/p>\n<p>But if a single insider is selling, it\u2019s probably not significant. So either positively it looks like the prospects are good, or negatively it looks like there\u2019s trouble ahead.<\/p>\n<p><strong>Question:<\/strong> All right. Let\u2019s wrap this one up.<\/p>\n<p>I\u2019m going to ask you two very specific questions.<\/p>\n<p>Say you\u2019re bullish on a stock, but you\u2019re not seeing any active insiders buying the stock. Are you still interested in potentially buying that stock without the existence of insider buying?<\/p>\n<p><strong>Martin Hutchinson:<\/strong> Yes, that doesn\u2019t worry me too much.<\/p>\n<p><strong>Question:<\/strong> Doesn\u2019t worry you a bit? So you still would place a buy order on that one?<\/p>\n<p><strong>Martin Hutchinson:<\/strong> Absolutely, yes.<\/p>\n<p><strong>Question:<\/strong> Now, conversely, what if you\u2019re bullish on a stock, but you\u2019re seeing some insiders selling? Doesn\u2019t that concern you?<\/p>\n<p><strong>Martin Hutchinson:<\/strong> If it\u2019s more than one insider, and fairly substantial amounts, yes, that does concern me.<\/p>\n<p>If they have lots of stock options and it\u2019s just balancing the stock options, not so much.<\/p>\n<p>But if several insiders are selling, then you worry that they know something you don\u2019t.<\/p>\n<p><strong>Question:<\/strong> I think that\u2019s the biggest takeaway for me personally, that if insiders are liquidating their position, I don\u2019t think it sounds like that\u2019s a real good stock to buy.<\/p>\n<p>Fair enough?<\/p>\n<p><strong>Martin Hutchinson:<\/strong> That sounds absolutely right, yes.<\/p>\n<p><strong>Question:<\/strong> All right, Hutch. As always, thanks for your time.<\/p>\n<p><strong>Martin Hutchinson:<\/strong> Great to be with you.<\/p>\n<p><strong>Question:<\/strong> This is <em>Wall Street Daily<\/em>, signing off.<\/p>\n<p>Smart investing,<\/p>\n<p>Martin Hutchinson<br \/>\nSenior Analyst, <i>Wall Street Daily<\/i><\/p>\n<p>The post <a href=\"https:\/\/www.wallstreetdaily.com\/2017\/06\/19\/strange-trail-breadcrumbs\/\" rel=\"nofollow\">A Strange Trail of Breadcrumbs<\/a> appeared first on <a href=\"https:\/\/www.wallstreetdaily.com\" rel=\"nofollow\">Wall Street Daily<\/a>.<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>By WallStreetDaily.com The technology craze will test your IQ. Don\u2019t value sizzle over steak. Insiders always leave breadcrumbs. Also recommended: Trump\u2019s \u201cspecial resource\u201d revealed. With the relentless advancement of mind-blowing technologies like gene editing, artificial intelligence and smart dust \u2014 more practical technologies are becoming underappreciated. However, it\u2019s a grave error to value a technology\u2019s [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-107706","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/107706","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=107706"}],"version-history":[{"count":3,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/107706\/revisions"}],"predecessor-version":[{"id":107725,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/107706\/revisions\/107725"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=107706"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=107706"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=107706"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}