Follow the Insiders

Wednesday's column on the battle between insider buying and short selling really got the old synapses firing. Insider buying is one of the strongest confirming factors for cheap stocks that I have ever found. When insiders are buying shares in companies that trade low on an asset- or enterprise-value basis, it's a good sign they think that the underlying value of the company may be realized soon. Rather than try to contemplate Maryland's double-overtime loss last night or try to make sense of the Orioles' offseason signings, I sat down this morning and ran screens for cheap stocks that have seen recent insider buying.

My first scan shows a lot of insider buying in financial names. It is not just banks, as insurance companies and real estate investment trusts are also seeing strong buying by officers and directors. Mortgage REITs have had a tough go of it the past few months, but insiders seem to think a turnaround is close....576 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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