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We love it when a famous CEO buys a large chunk of his company’s stock.
In January 2022, Reed Hastings, the co-CEO of Netflix, purchased 51,440 shares for nearly $20 million, despite already owning over 5 million shares.
This was his first open market purchase of Netflix shares ever. He didn’t even buy during the dark times of the financial crisis.
This big purchase made headlines and was analyzed on Twitter and StockTwits by stock investors.
Insiders Buying En Masse
But what about when non-famous insiders buy their company’s stock, and when a group of them buys en masse?
This mass insider buying behavior is known as a “cluster buy,” and it is the strongest signal available in insider trading.
When one insider buys, they may be considered an optimist, especially when the CEO is involved. But what about when four or five insiders all buy at the same time?
Now, that’s a powerful consensus.
However, you won’t hear about the cluster buys from the media. There won’t be headlines trumpeting the buys of a few corporate Directors and a CFO.
Nope. The cluster buy simply isn’t glamorous enough.
Investors, therefore, have to dig below the surface to find the insider cluster buys. But once you do, that’s where big rewards can be found.
Cluster Buying Sends the Strongest Signal
Why do insiders spend so much of their money on their own companies’ stock when they already own a ton of shares already?
Greed!
Pure and simple.
The opportunity to make more money motivates people- even people who are already well off, like highly paid CEOs and CFOs.
When insiders buy in a cluster, it’s because they all know something very good is going on at the company. Maybe it is a new product. Or contract. Or pending merger. Whatever the reason, they are all very confident that shares will rise.
After all, who would buy more stock in a company if they knew it was sinking? And why would there be several of them buying unless they didn’t collectively believe that their stock was a value?
When things at the company are THAT good, insiders don’t want to miss out when everyone else is cashing in. Call it insider peer pressure if you will.
Continued . . .
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Buy These Insider Stocks Now
When in-the-know officers dip into their pockets to buy shares of their own company, there’s only one reason: They expect the stock price to go up.
Because of their inside knowledge of anticipated contracts, mergers, product breakthroughs, and similar information, insiders are required to report their trades to the SEC within 48 hours. Zacks has zeroed in on the best of these buys.
Our recommended insider buys are time-sensitive and normally closed to public view – but you can still see them until midnight Sunday, March 30th.
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Real Life Cluster Buying
Shares of oil producers plummeted in the 2020 coronavirus sell-off as global oil prices plummeted.
They remained depressed over the summer of 2020 and into the fall, even as crude prices rose back above $40 a barrel.
The insiders at oil producer Matador Resources, who explores in New Mexico, West Texas, and Northwest Louisiana, saw an opportunity with their shares still in the single digits.
In November 2020, 6 insiders, including the CEO, the COO of Operations, and 4 directors, dove in to buy again, with 5 buying even before Pfizer’s big November 9, 2020 announcement that its vaccine was over 90% effective against the coronavirus.
Pfizer’s announcement and subsequent roll-out of its vaccine lit a fire under the beaten-down oil stocks. The rally continued into 2022 as energy prices spiked due to the Ukraine War. Energy was the best-performing S&P 500 sector in 2021 and 2022.
From December 1, 2020, through December 30, 2022, shares of Matador surged 387%.
Diving in Yet Again
However, 2023 brought yet further changes to market conditions, as crude and natural gas prices returned to their pre-Ukraine War levels.
Shares of Matador fell 23.5% through March 17, 2023, and the insiders saw yet another buying opportunity. A cluster of 5 insiders bought shares that spring, including the CEO, 2 directors, the EVP of Reservoir Engineering, and the President of Operations.
Off the March 17, 2023 lows, the shares rallied 30.9% through December 31, 2023.
But WTI crude prices fell again in 2024, and so did shares of Matador. They fell to a new 52-week low that fall. That created yet another buying opportunity, and the Matador insiders did not hesitate.
In September 2024, 9 Matador insiders jumped in to buy shares, including the CEO, the CFO, the General Counsel, several directors, and heads of departments, including the President of Land A+D and Planning.
And now, in March 2025, 11 insiders have jumped in to buy again as the stock has fallen in this year’s market correction.
What do they know?
Buy When the Insiders Buy
When high-level insiders buy, they are required to report the purchases to the SEC within 48 hours of the transaction. The trade then becomes public information.
Hedge funds and other professional investors routinely use this information to get an edge on their trades.
For most of us, though, it’s not easy to get access to insider information.
While the media will tout the huge insider buys from celebrity CEOs like Reed Hastings’ January 2022 $20 million Netflix share purchase, you’ll almost never hear about the non-celebrity CEOs, or other top-ranked officers when they buy their stocks.
Was anyone talking about the recent Matador cluster buy?
The challenge is getting easy and reliable access to all insider trades and then figuring out which ones to buy.
Where to Find the Cluster Buys
Anyone can go on the SEC website and get insider trading information, but it’s time-consuming to search by individual companies.
Some investment firms collect the insider buying data and can provide it to you as a daily list. Have you ever seen one of those lists? The sheer number of companies can be overwhelming.
And those lists don’t usually separate out the cluster buys, which sometimes occur on different days within the same week.
For example, if you’re getting daily insider updates, you may not realize that the CEO bought on Monday, but 3 directors bought on Tuesday. You may pass by those ‘hidden’ cluster buys without even realizing it.
Even if you got a list of the cluster buyers, how would you narrow it down to the stocks that are truly worth buying? If I’m going to buy when the insiders are buying, I want to buy only their top picks.
Today’s Hottest Insider Buys
Zacks' research team has developed a unique strategy to identify only those top picks that insiders are scooping up.
We monitor selected insider buying activity at companies with strong earnings and valuations. Then we analyze:
• Who's buying? How much money are they putting in?
• When, if ever, have they bought shares in the past?
• Do they receive shares as part of their compensation but still want more?
• Are we seeing "Cluster Buys"?
Very few stocks meet the demanding criteria of our Insider Trader portfolio >>
While not all our insider picks are winners, we recently closed gains of +60.0%, +70.6%, and +113.4%.¹
See the stocks we're currently holding for just $1. There's no obligation to spend a cent more.
Free Bonus: You can also download Zacks' just-released Special Report, 7 Best Stocks for the Next 30 Days. From our proven list of 220 Zacks Rank #1 Strong Buys, our team of experts selected these 7 for immediate breakout.
Important note: Access to the Insider Trader portfolio and Special Report is limited. This opportunity ends at midnight Sunday, March 30th.
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All the Best,
Tracey Ryniec
Insider Stocks Strategist
Tracey Ryniec, Zacks' insider and value strategist, is Editor in Charge of Insider Trader.
¹ The results listed above are not (or may not be) representative of the performance of all selections made by Zacks Investment Research's newsletter editors and may represent the partial close of a position. Access grants you a comprehensive list of all open and closed trades.