What Happens After an Insider Buys? Evidence From 47,458 Open-Market Purchases
u/DanielAPO ·
Reddit — r/ValueInvesting
· August 20, 2026 at 17:08
· ⬆ 40 pts
· 💬 10 comments
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AI Summary
Summary
The author analyzed 47,458 open-market insider buys from 2020–2025 and found that insider buying did not reliably predict future outperformance.
Larger insider purchases actually performed worse than smaller ones, and first insider buys after long dry spells lagged the S&P 500.
Insider buying may still be useful as a starting point for deeper research, but not as a standalone buy or short signal.
Quality assessment: Well-researched empirical DD with clear caveats (survivorship bias, short sample, no risk adjustment), though limited in trading applicability.
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I went through 47,458 insider buys. The biggest ones were actually the worst.
I have always paid attention when an insider buys stock, especially when it is a large purchase or the first one in years. So I pulled the open-market buys from 2020 to August 2025 to see whether either of those things was actually useful.
**Short answer: not really.**
A year after the purchase, the stocks did better than the median listed stock but worse than the S&P 500. More importantly, I got a similar result when I moved the starting date six months or a year forward. It looks more like insiders tend to buy a certain type of company than the purchase itself being a catalyst.
I also found 858 cases where nobody at the company had bought for more than two years. Their median return over the next year was just 0.74%, trailing the typical S&P 500 constituent by 6.55 points. The same lag showed up away from the purchase date, so I would not treat the first buy back as either a buy or short signal.
The strange part was purchase size. The largest 10% of buys did much worse than the smallest 10%, and that difference was not there in the placebo windows.
I still think insider buying is worth looking at, but more as a reason to investigate the company than a reason to buy it. A multimillion-dollar purchase does not seem to be a stronger signal just because the number is bigger.
The sample only covers 2020–2025, has survivorship bias and is not risk-adjusted, so I would want to see it tested over a longer period.