Company insiders dump millions into this…

Sean BowerIf you want to profit from the insiders, you have to look at the hints they unwittingly leave us. And one of the most powerful hints is how big their purchases are.

That’s why I have located the largest insider purchase in the past month…

If an insider decided to spend tens of millions of dollars of his own money on his own company’s stock, how confident do you think he is that the price of it will soon go up?

Every once in a while it’s helpful to take a step back and look at things from afar. One of the advantages of doing so is getting to see the biggest insider purchase in the past month.

Right now, that insider purchase amounted to a value of $76.59 million when a 10% owner bought almost 56 million shares of SWK Holdings Corp (SWKH) in late August.

This purchase made by Carlson Capital LP could be a huge hint being dropped that we can capitalize on, but we shouldn’t do anything without researching every major part of the situation.

And the first thing I want to look at is the chart of SWKH from Stockcharts.com:

When I first look at this chart, two things jump out at me.

  1. SWKH is a penny stock—the price is currently $1.44.
  2. The insider purchase by Carlson Capital caused a huge trading volume spike.

Trading volume is simply the amount of trading taking place for a particular security over a day. And it’s clear to me that the late-August insider buy sent the price up by looking at its correlation to the buying volume spike at the same time.

This tells me that the insiders have significant power regarding this stock because they can dominate the trading of the stock when they want to.

The fact that SWKH is a penny stock is also interesting.

Penny Stocks have the potential to jump sky high, but they can also be extremely volatile.

SWKH operates as a specialized finance company focusing on the healthcare sector worldwide with only 3 full-time employees, yet an insider decided to spend over $76 million on shares.

I can draw a few possible conclusions from this…

Either the insider has some intel that points toward the stock rising, the insider views SWKH as a discount buy, or the insider is trying to push the price up itself to attract new buyers.

The main problem I see for SWKH is that only one insider is buying. If several more insiders join in, I’ll be even more interested in trading SWKH.

If you would like more insight on insiders like this, check out wallstreetinformer.com.

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