When the market sells off, the usual suspects come out with their predictions. Strategists warn of further downside. Retail investors panic-sell. But there is one group that tends to cut through the noise with real conviction: corporate insiders. These are the officers and directors who actually run the companies, see the order books, and know whether the business is genuinely deteriorating or just temporarily battered by headlines.
Here is the surprising part: despite March’s significant stock market decline, corporate insiders as a group became slightly more bullish, not less. According to data tracked by market analyst Mark Hulbert, a key insider sentiment indicator actually showed insiders increasing their net buying activity during the selloff. If insiders had been accelerating their selling, that would have been a serious warning sign. The fact that they moved the other way suggests they do not believe this downturn signals a structural break in their businesses.
This matters more than most people realize. Academic research has long demonstrated that insider buying, particularly open-market purchases (as opposed to stock granted through compensation), is one of the more reliable leading indicators for a stock’s future performance. Insiders do not buy their own stock when they think it is going lower. They buy when they see value that the market is missing.
The current situation has some interesting nuances. The selloff was driven largely by external shocks: the Iran war, energy price spikes, and macro uncertainty around the Fed. Those are real headwinds, but they are also the kind of headwinds that affect the economy broadly without necessarily impairing specific companies’ competitive positions or long-term earnings power. An insider at a software company or a consumer staples firm who keeps buying through an oil-shock-driven correction is signaling exactly that.
What should investors do with this information? Use it as a filter, not a trigger. Insider buying is a tailwind signal, not a one-size-fits-all buy recommendation. But if you are sitting on a watchlist of quality companies that have sold off 20% or more and you have been waiting for confirmation that the selling is overdone, the insider data is giving you a green light to at least start building positions. The smart money inside the building is already doing exactly that.
