Insider buying is the purchase of shares in a corporation by a director, officer, or executive within the company. Insider buying is not the same as insider trading, which refers to corporate insiders making illegal stock purchases based on non-public information.

We have found in backtesting thousands of companies’ data that insider buying is a positive sign. We want to be on the same wave upwards when top executives/directors/officers are purchasing shares of their own company. If the subject matter experts feel that the intrinsic value of their own company is higher than the current market price, then who are we to argue?

Specifically for our Marcsten Large Cap Strategy, we only allow for the top third of companies in the S&P 500 as measured by total insider transactions that involve a net purchasing of shares.