Nobody knows more about a company’s prospects than its directors. Chief executives, finance bosses and other board members are privy to the kind of information that investors and analysts would give their right arms for, including the true value of their employers’ assets and future earnings potential.
Without an inside link and direct path into boardrooms, investors are left in the dark and forced to second-guess company secrets. One method that has proved to be particularly popular involves keeping tabs on the latest director dealings.
When a high-ranking employee buys or sells shares in the company he or she works for, it’s difficult not to read between the lines and assume that they’re revealing new information. Nothing screams confidence more than a director buying up shares, just as a decision by a board member to sell hints that all is not well.