Sunday, March 1, 2009

MICRO CAPS HUNTING - ( Part 3 ) DIRECT INSIDER BUYING

THE REAL ECONOMIST EXPLAINS GVSS STOCK PICK FOR PROS ONLY:
INSIDER BUYING IS A STRONG TOOL FOR EVALUATION.
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There are many tools for evaluating micro cap stocks. I don't like to call them all penny stocks, because for me, penny stocks are the ones where you have at least 100 million shares or more and they trade for just a few pennies. Micro caps are just small tiny companies. When a micro cap becomes a penny stock, then I have to evaluate if to sell it or buy more. One of my preferred tool is Direct Insider Buying. Direct means that the insider is putting his/her money,dollar per dollar and not pennies on the dollar, for the purchase of traded shares. The insider is probably sending a signal to the street that he is buying because he feels that shares may be a bargain at that particular price. He may be right, he may be wrong, he may be clever or he may be not so clever. After the direct purchase, the insider has to file a Form 4 within an amount time. A Form 4 looks like this
http://app.quotemedia.com/quotetools/showFiling.go?name=GVI%20SECURITY%20SOLUTIONS%20INC:%204,%20Sub-Doc%201&link=http%3A//quotemedia.10kwizard.com/filing.xml%3Frid%3D12%26ipage%3D6081722%26DSEQ%3D1%26SQDESC%3DSECTION_BODY%26doc%3D1&cp=off&type=TEXT
For the nasdaq.com site go to:
http://www.nasdaq.com/asp/quotes_sec.asp?symbol=GVSS&selected=GVSS
Direct buying is real and tangible if you compare it to indirect buying or exercise of below market options or just free stock. Of course, direct insider buying is just one tool and many other tools must be looked at separately before combining them to see what effects it can have on that particular stock.

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