Stocks are in free fall.
Dow Jones futures fell 335 points, as I write this, while S&P 500 futures and the Nasdaq fell 40 points and 101 points, respectively.
Amid the turbulence, every investor I’ve talked to is struggling to find their footing on shaky ground. Last week, the Dow fell more than 1,000 points on two separate occasions. The last time it did that was March 2020 — right before the economy came to a standstill.
It seems as good a time as any to ditch the stock market to look for less risky ventures… but a select and influential few are attempting to pull out of the tailspin. Who are these bullish investors capitalizing on today’s market fear? Insiders.
I’m talking about CEOs, CFOs, COOs, board members and big-time hedge funds. These corporate insiders are buying the dip.
This group makes up the so-called “smart money” in the market. They’re the folks who know more about their businesses than anyone in the world – and that group of people went on a buying spree last week.
Insider trading across the whole market soared to levels not since mid-March. That’s interesting because from mid-March to mid-April, stocks popped more than 10%. And those with heavy insider buying popped much more!
Well, today, we’re seeing another big insider trading shopping spree. If history repeats, then we could be on the verge of another big short-term rally in the stock market. And those with the heaviest insider buying should lead that rally!
So, which stocks should you buy today to capitalize on this insider trading boom? Let’s take a deeper look.
Bullish Tech Cohorts Are Doing Most of the Insider Trading
Tech stocks were at the epicenter of last week’s market selloff. At one point, on Thursday, the tech-heavy Nasdaq was off more than 6%.
It was nothing short of a bloodbath.
But among that wreckage, tech insiders saw a huge buying opportunity. Every day last week, there was major tech insider trading. (Note: Friday data hasn’t been reported as of this writing).
On Thursday, a board member at Rockwell Automation (NYSE:ROK) bought over $240,000 worth of Rockwell stock.
On Wednesday, the CEO of HP (NYSE:HPQ) and a board member at PayPal (Nasdaq:PYPL) bought nearly $100,00 worth of PayPal stock. That same day, the CEO of Align (Nasdaq:ALGN) bought nearly $2 million worth of his company’s stock.
Last Tuesday, the CEO of Playstudios (Nasdaq:MYPS) threw $60,000 into his company’s stock. That continued what has been a million-dollar-plus buying spree since January.
And, on Monday, a major hedge fund bought $7.6 million worth of Appian (Nasdaq:APPN) stock. Another major hedge fund put $10.7 million into Fiserv (Nasdaq:FISV). And Rocket Companies’ (NYSE:RKT) CEO bought around $600,000 worth of RKT stock.
That’s a lot of insider trading.
But it’s honestly just the tip of iceberg. Over the past few months, insiders have been loading up on tech stocks amid this sell-off in a way that I’ve only seen once before in my investment career – during March 2020, before tech stocks went from crashing to soaring.
The Biggest Insider Buying Spree Ever?
In March, tech stocks were reeling as much as they are now. And back then, my team and I did a deep dive into the insider buying trends at tech stocks. The goal? To see if insiders are buying the dip in their own stocks.
The conclusion: They are. And in an enormous way… especially in hypergrowth tech stocks. That’s quite the bullish sign for the sector.
From late February to mid-March, over 50 corporate insiders bought $470 million-plus worth of various hypergrowth tech stocks.
CEOs and CFOs were buying. Board members and hedge funds were buying. And they were buying in huge chunks, across multiple purchases.
All that insider trading has continued since then, with another spike coming last week.
This is a buying spree like I’ve never seen before.
And guess what? A lot of the buying is centered around stocks that we own in our Innovation Investor portfolio.
See the chart below. It includes a list of all hypergrowth tech stock insider purchases during that three-week stretch in February/March. The tickers are redacted for confidentiality purposes. But the stocks we own in Innovation Investor are bolded to emphasize that portfolio’s robust exposure to this buying spree.
Corporate insiders believe many of the stocks we own are due for a huge bounce over the next few months. And we couldn’t agree more.
The Final Word on Bullish Insider Trading
If you read our work often, you know that we believe we’re in a rolling bear market. And things are going to get worse before they get better.
The next few months could be ugly for the S&P, the Dow and the Nasdaq.
However, amid that chaos, our analysis suggests that washed-out hypergrowth stocks will soar.
Sounds counterintuitive, sure — but it happens every single time we find ourselves in a position like this. Hypergrowth stocks are always the first to fall into a bear market. They’re also always the first to rebound.
Hypergrowth stocks bottomed in November 2008 — five months before the market flatlined in March 2009. Over that stretch, many hypergrowth stocks doubled while the broader indices dropped 10%.
Back in 2001-02, hypergrowth stocks bottomed in April 2001 — more than a year before the broader market did. Over that stretch, certain hypergrowth stocks rose 100% or even 200%, while the broader indices dropped 20%.
We’re seeing history repeat, and we’re nearing that critical inflection point. The broader markets will keep spiraling lower. And certain hypergrowth stocks will stage a huge comeback as everything else crashes.
And what better stocks are there to capitalize on this phenomenon than those the bullish insiders are buying in bulk?
Our Innovation Investor portfolio is chock-full of those stocks. We own all the “insider favorites” — and we’re confident they’re prepared to soar!
Find out their names and ticker symbols.
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.