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Tickers in this Article: PRU, AEO, BBY, RES, SLB, CQP, CNO, AFG, BKS
There are probably a million reasons why insiders might sell their company's stock - to buy a home, to send a child to college, to pay off debt, to pay taxes, or to diversify investment holdings for example.

However, there is usually only one reason why insiders buy their company's stock - to make money. (Not all insider trading is illegal. To learn more, read Uncovering Insider Trading.)

In August, despite all the recent market turmoil and the generally lackluster economy, insiders actually bought their company's stock at a clip not seen since the 1990s. According to InsiderScore.com, a company that tracks insider transactions of all types, insiders purchased $465.5 million in stock - the highest level seen since 1990!

Senior executives are usually granted stock options and other performance related bonuses that are tied to their company's stock price. So, for an executive to concentrate his or her investment holdings even further really says something!

InsiderScore didn't elaborate on what's causing all this bullish sentiment, but my guess is that insiders feel the worst might be over, and they want to buy in before the Fed opens up the spigot and lowers rates. At least, that's my two cents. (For added insight on this potential signal, check out When Insiders Buy, Should Investors Join Them?)


Insider Highlights
InsiderScore reveals that the buying wasn't simply in one sector. In fact, the bullishness was demonstrated across a number of groups. Among the big buyers:

Energy
There was big buying by RPC's(NYSE:RES) chairman, Randall Rollins, Schlumberger's (NYSE:SLB) director, Michael Marks and Cheniere Energy Partners' (NYSE:CQP) chief executive officer, Charif Souki.

Insurance
With the stock near its 52-week low, executives at Conseco (NYSE:CNO) swooped in and scooped up some shares. In addition, insiders at Prudential (NYSE:PRU) and American Financial (NYSE:AFG) were apparently pretty optimistic about their company's future as well given their buying activity.

Retail
The retail sector has been in the tank for the last few months and the outlook for the remainder of the year is lackluster at best. That's why I was surprised to see some buying at a number of high profile retailers. Among the big buyers:

Best Buy's (NYSE:BBY) chief information officer, Robert Willett, saw fit to purchase 11,300 shares. This despite increased competitive pressure from other retailers and some internet sources undercutting Best Buy on flat-screen televisions.

The founder and chairman of Barnes & Noble (NYSE:BKS), Leonard Riggio, bought 100,000 shares. The stock trading in the lower end of its 52 week range.

Despite being beset by heavy markdowns and intense competition, a couple of insiders at American Eagle Outfitters (NYSE:AEO) decided to pony up for the shares.


The Bottom Line

Interestingly, insiders (who are traditionally longer term holders by the way) seem to be the most active at the companies whose stocks are the most beaten down. With that in mind, what would have been really interesting would have been insiders who were buying at tops or near 52-week highs. That would be the epitome of bullishness in my book, unfortunately that wasn't in evidence.

Although many continue to suggest that our economy and our markets could be in trouble, the insiders on the front lines are apparently bullish, and that deserves at least some attention.

To continue reading on this topic, check out Keeping An Eye On The Activities Of Insiders And Institutions.

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