Why investors should pay attention to director dealings

Recent director dealings show that company executives and wealthy families are getting nervous. Maybe we should be too.

Walmart © Barbara Ries

Walmart is selling and not just groceries
(Image credit: Walmart © Barbara Ries)

One informal indicator market watchers like to keep an eye on is "director dealings". When a director buys or sells a significant chunk of shares in the company they work for, it always draws attention. After all, who is better placed to know a company's prospects than those who run it? This is why "insiders" are only allowed to buy and sell shares in their own firms at certain times eg, a CEO can't buy or sell in the run-up to their annual results coming out (this is known as a "closed period"). Big buys by an insider are obviously bullish. Big sales don't look so good yes, they might be needed to resolve a divorce or a tax bill, but it's rarely good news to see top managers baling out of their own stock.

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John Stepek

John Stepek is a senior reporter at Bloomberg News and a former editor of MoneyWeek magazine. He graduated from Strathclyde University with a degree in psychology in 1996 and has always been fascinated by the gap between the way the market works in theory and the way it works in practice, and by how our deep-rooted instincts work against our best interests as investors.

He started out in journalism by writing articles about the specific business challenges facing family firms. In 2003, he took a job on the finance desk of Teletext, where he spent two years covering the markets and breaking financial news.

His work has been published in Families in Business, Shares magazine, Spear's Magazine, The Sunday Times, and The Spectator among others. He has also appeared as an expert commentator on BBC Radio 4's Today programme, BBC Radio Scotland, Newsnight, Daily Politics and Bloomberg. His first book, on contrarian investing, The Sceptical Investor, was released in March 2019. You can follow John on Twitter at @john_stepek.