If you are a regular reader of my Insider Tracking column, you know that insider selling isn’t as powerful as insider buying…at least not as an indicator for us.
However, sometimes numerous company insiders decide to bail on their company’s stock all at once. When this happens, we can confidently assume they are doing so for a good reason.
So, why are the insiders dumping this stock?
As I’ve said before on several occasions, the insiders only buy for one reason…they think the price of the stock will go up.
On the flip side, they can sell stock for any number of reasons. They may think the price will go down, but they may also need the money to pay for medical bills, or to send a child to college, or because they want to reinvest it elsewhere, etc.
Having said all that, we simply cannot overlook insider selling when it occurs for 7 company officers within a span of a few days!
And that’s exactly what’s happening with Cisco Systems, Inc. (CSCO)…
CSCO designs, manufactures, and sells Internet Protocol (IP) networking products and services related to the communications and information technology industry worldwide.
So why have the insiders sold a total of 653,000 shares for nearly $16.5 million?
Well, the latest news regarding CSCO is that it will invest $1 billion over two years to expand its services regarding its cloud offerings, and is adding 30 new Intercloud partners.
So far, none of the news out of CSCO has made me think the price will soon be going down, but the fact that so much insider selling is going on tells me that the insiders know something that hasn’t become public. And that information could have a negative impact on the stock’s price.
These insiders could be selling because of market volatility, which we are experiencing with the overall market. OR they could be selling in order to get out of the stock before it plummets.
Either way, the Stock Code Breaker course will tell us when CSCO should be a buy or sell, and we can simply use insider transactions to lead the way and profit from it.
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