What to Read from Insider Selling?

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Not too much. From time to time, the insiders of the company, a.k.a, the founders, the senior management, or even the venture capital, decided to sell their stocks in the public market. As ordinary investors I used to be worried about those kinds of events. Until I read Peter Lynch’s book One Up On Wall Street lately. Now I think we don’t need to read too much from this. Insiders are also human beings, they may want to buy a nice house, send their kids to Harvard, etc. In other words, they need to have some cash. From investment point of view, they don’t want to have 100% of their investment in their own company’s stocks too (Buffett is an exception because he is the Guru of investing/money management).

Last Friday New Oriental revealed that its CEO Yu Minghong and another director will sell a large amount of stocks. It’s no surprise the market reacted negatively. But I am not worried. I bought some more EDU stocks instead. At 33.00 (note its fiscal 2007 first 6 months earning $0.68, and its first quarter is the strongest traditionally), I believe it’s fair priced.

This morning the news came another company Mindray will sell more stocks. I am not worried either. Because in all these cases, the fundamentals of company are intact.  

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