Find Value Stocks by Analyzing Insider Trading: Advisor

• George Muzea analyzes legal insider trading to come up with trade ideas.
• He tracks when company directors or employees buy or sell stocks.
• Muzea shared his three golden rules and two companies that could be set to surge based on insider activity.

Elon Musk and his brother Kimbal hit headlines last week when they respectively sold $8 billion and $109 million of Tesla shares.

That sort of behaviour can serve as a price signal for investors, according to George Muzea, who tracks when directors and employees buy and sell shares in their companies.

“Insiders are basically value investors,” he said, speaking at the Edge Group‘s investing conference in London, which was raising money for Alzheimer’s research. “They buy into price weakness and sell into price strength.”

For over 40 years, Mezua has tracked insider activity to make better investment decisions. In that time, he’s advised the legendary investor George Soros and even hosted his own TV show, the ‘Muzea Insider Report’.

“Back in the ’70s and ’80s, I was the lone ranger and it was really fantastic,” he said. “But now, everyone’s looking at this.”

Muzea has learnt a lot over the past half-century. In that time, he’s come up with a set of rules to perfect insider trading tracking, looking at the actions of people like the Musk brothers.

“I’ve made a lot of mistakes over the past 50 years,” he said. “But I try to sum up the long history of my work in just a paragraph or two.”

Muzea shared those three rules, and listed two stocks to buy based on current insider activity.

Insider activity rules

Muzea’s first rule is to buy when insiders pay for stock. He said this can prove particularly effective in more bearish markets.

“In market bottoms, there’s a lot of insider buying because most insiders are value conscious and they’re looking at equity value,” he said. “My strategies are exceptionally effective at bottoms because they’re easy to see and contrarianism always looks the same.”

Next, Muzea advised to hold when investors sell into strength – with Elon Musk’s recent sales after Tesla’s surge to a share price of over $1,000 this year one example of this sort of insider behaviour.

“Insiders will always sell into price…