Make Insider Trading Work For You — Without Going To Jail

2. Illinois Tool Works Inc. (NYSE:ITW)

Chief Financial Officer Michael Larson doubled his holdings of ITW with his September purchase of 7,000 shares at $74.25. After the transaction, Illinois Tool Works missed third-quarter earnings estimates. Shares dipped, but then took off again on the upside to a recent $78. The company is spinning off its industrial packaging division, which should continue to have a bullish effect, in addition to a share buyback plan that could push shares higher.

3. Synageva BioPharma Corp (NASDAQ:GEVA)

Chairman Felix Baker recently purchased more than 1 million shares at $56.63 apiece. He currently holds 7.8 million shares of GEVA. Synageva has a substantial pipeline of treatments for rare diseases, with a treatment for lysosomal acid lipase (LAL) deficiency being the lead candidate.

Risks to Consider: Insider activity is not necessarily a sign of pending price changes in a stock. It should be considered another tool in your investment toolbox, not the end-all for decision making. Always use stop-loss orders, diversification and position size properly regardless of insider activity.

Action to Take –> Be aware the insider activity on every stock in your portfolio and start this discipline on every new stock you consider buying. Insider activity can signal substantial pending price changes and help you figure out which holdings to keep a closer eye on.

This article was originally written by David Goodboy and posted on StreetAuthority.

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