Benzinga | Dec 8, 2020 11:11AM EST

Insider Buys 180 Degree Capital's Stock



A Form 4 filing filed with the SEC on Tuesday, December 8 showed that President Wolfe Daniel B bought 2,000 shares of 180 Degree Capital Inc (NASDAQ:TURN) at an average price of $2.05. The transaction moved the executive's stake in 180 Degree Capital Inc. to 353,500 shares. 180 Degree Capital was trading 0.1% lower from the previous closing price.

The Importance of Insider Transactions

While transactions from an insider shouldn't be used as the sole item to make an investment or trading decision, an insider buying or selling stock in their company can be a good added factor that leads to more conviction in a decision.

When an insider buys stock after an important sell off, that can indicate the insider's faith in the success of the organization. Henceforth, if the stock is bought at new highs, it might be because the insider feels that the stock is not overvalued. Conversely, insiders who are selling stock at new lows can potentially indicate some kind of capitulation moment. Insiders selling at new highs can indicate that exec wants to "take some profit" and "lock in a gain."

Important Transaction Codes

Investors prefer focusing on transactions which take place in the open market, indicated in the Form 4 with codes P for purchase and S for sale. If the transaction was an open-market transaction, that means that the insider made a concious decision for the company's stock moving forward.

Transaction codes other than P or S are often viewed with less conviction as they are often not tied to a decision by the exec. As an example, transaction code C indicates the conversion of an option. Transaction code A indicates the insider may have been forced to sell shares in order to receive compensation the exec was promised upon being hired by a company.