As regular readers know, I’m constantly digging through the numbers, information, and rumors to find out how the honest investor can be protected– and even profit– from company execs taking advantage of inside info.
That’s exactly why all of my research has led me to one very intriguing situation on Wall Street.
Not everything is adding up just yet, but the insiders are starting to act up, and it’s our turn to make a profit off them.
The company I now have my eye on is The Cooper Companies Inc. (COO). It is a medical device company from the health sector that operates internationally. Among other products and services, COO focuses on the development and manufacturing of contact lenses.
The first thing that brought my attention to COO is the fact that 7 company insiders (that’s officers, directors, and owners of 10% or more of a class of a company’s securities) have sold shares in the past week. And even more insiders have been selling dating back to July 3.
Over 189,000 shares have just been sold, most of which by the company’s officers!
That really got me interested, so my next step was to look at the chart of COO, which looks like this:
I have to say, with such heavy insider selling, I expected a chart in much worse shape than that. I was waiting for something pointing straight down, causing the insiders to bail on their own company’s stock.
Yet that’s simply not the case. This is actually a very healthy short-term chart. So why are the insiders duping stock like crazy?
For me, this can mean one of three things…
First, it could mean that one or more of them got overly excited when the price took that big leap up. And when one insider decided now was the time to sell, several starting following along.
Second, the insiders may be giving us a clue about the future of this stock. If they have some inside information about where the price is headed (if they know of some poor earnings about to be made public or something to that effect), then they may be getting out of the stock while they have a chance.
Third, the insiders in this case may just be dumb when it comes to reading a chart. It may seem ridiculous, but many insiders don’t know when to buy or sell, just like most of the public.
They simply never learn the chart-reading skills that we teach readers in our Stock Code Breaker course.
That’s why we need to keep track of where this stock is headed. If the price keeps on its current trend and proves the insiders to be ignorant, we can make some huge profits.
However, if the stock starts to look bad and turns downward, then we know the insiders have given us the hint we need to sell or stay away from this particular company.