7 Blue-Chip Stocks You’re Selling, But Insiders Are Buying

As the media and investors whipped up a frenzy of COVID-19 panic selling in March, some corporate insiders (such as CEOs and directors) had an entirely different take.

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As the media and investors whipped up a frenzy of COVID-19 panic selling in March, some corporate insiders (such as CEOs and directors) had an entirely different take. They calmly scooped up shares of their own companies at an insider buying rate we haven't seen in a decade.

Here's some useful market insight: When investors and the media are super-negative and insiders are buying in droves, that's often a great time to purchase stocks for the medium-term, which is at least two or three years.

Here's another bullish signal from insider trading: Many insiders are buying companies in the "wrong" places. They're decidedly going for stocks in energy, basic materials (such as chemicals) and consumer-facing businesses. These are all among the hardest-hit areas of the market, with more to lose in a prolonged recession.

This all adds up to the boldest "contrarian" insider trading buy signal that I've ever seen in the 10 years I've tracked insider activity as a starting point for investment ideas in my stock letter Brush Up on Stocks (opens in new tab).

Here are seven blue-chip stocks that have experienced significant insider buying lately. Insider buying, like any other signal, isn't a guarantee of anything. So to improve our chances of success, we narrowed down a list of companies seeing heavy insider buying to make sure we're buying high-quality names. Thus, this list is made up of blue-chip companies with market values of at least $20 billion that boast enduring, powerful brands and/or some other barriers to entry.

Data is as of April 1. Purchase amounts range from $250,000 to millions of dollars. But if you decide to follow insider trading after this, don’t be put off by smaller numbers. For my stock letter, any purchases above $100,000 can be a meaningful signal, especially when combined with other bullish patterns such as “cluster” buys or line officer buying, which we also see in several of the stocks on this list.

Michael Brush
Contributing Writer, Kiplinger.com
Michael Brush is an investor and market commentator for MarketWatch who also publishes a stock newsletter called Brush Up on Stocks. Brush is a graduate of the Columbia Business School Knight-Bagehot Fellowship Program, and the Johns Hopkins School of Advanced International Studies in Italy. He has also covered business and investing for The New York Times, The Economist Group and MSN Money, and he has won several journalism awards. He is the author of Lessons From the Front Line, a book about investing published by John Wiley.