When a CEO or CFO buys their company's stock, does it do better?
No. Since 2003, US stocks whose CEO or CFO made an open-market purchase in the previous 30 days beat the same day's median stock over the next month 50 times in 100; stocks where three or more insiders bought, 50 times. A coin flip gives 50. Over three months the readings were 50 and 50. At neither horizon does either event show a measurable edge.
The paper
The full study: its data, method, robustness, limits and sources.
Opulence Alpha Research · Published Sep 25, 2026 · Data through Aug 21, 2026
Keywords: CEO buying stock, insider buying, does insider buying predict returns, insider purchases backtest, cluster insider buying, Form 4 insider trades·JEL classification: G11, G12, G14, C12, C58
- Universe
- The same for every study: 1,767 US common stocks in the 11 GICS sectors, 422 of them since delisted; S&P 500 members since 1996 plus large and mid-sized companies outside the index
- Period
- Every Wednesday from Jan 4, 1995 to Aug 19, 2026: 1,634 Wednesdays across 7,959 trading sessions
- Sample
- n = 1,763 stocks of the 1,767-stock universe; 1,889,758 stock-weeks, a median of 1,148 stocks per Wednesday
- Outcome
- Return over the next 1, 5, 21 and 63 trading sessions against the same day's median stock
- Inference
- t on non-overlapping dates; proven only when |t| ≥ 3 and the same sign in at least 60% of years
1Introduction
Insiders know their company better than anyone, so when a chief executive spends their own money on the company's shares, many investors take it as the strongest signal there is; several insiders purchasing within weeks of each other is read the same way. Lakonishok and Lee (2001) found that insider purchases were followed by higher returns, mainly in smaller companies. This study asks whether stocks whose CEO or CFO, or several insiders, recently made open-market purchases go on to beat other stocks.
2Data and method
2.1Sample design
Population and frame. The population is US common stocks listed on the NYSE and Nasdaq; funds, ETFs, trusts, preferred shares, warrants and units are excluded. The sampling frame is a fixed universe of 1,767 companies, drawn once when the platform was built and not re-sampled since, in two strata. Stratum 1 is a census of the S&P 500: every company in the index at any time since 1996 whose price history could be recovered, 1,027 companies of which 413 have since delisted; it holds 76% of the index's members in 1996 and at least 96% in every year from 2010. Stratum 2 is 740 large and mid-sized companies outside the index, selected in proportion to the market's sector weights from the stocks that passed a minimum share price of $15 and a minimum average daily trading value of $25 million; 9 of them have since delisted.
Sample. The unit of observation is a stock-week: one stock on one Wednesday. A stock enters a Wednesday's cross-section when it has a valid close that day, a value of the signal and a measured outcome; bars flagged as bad data and returns that cross a change of issuer are left out. This study's sample is n = 1,763 stocks of the 1,767: 1,889,758 stock-weeks on 1,634 Wednesdays from Jan 4, 1995 to Aug 19, 2026, a median of 1,148 stocks per Wednesday (range 820 to 1,371). 331,954 stock-weeks (17.6%) come from the 422 companies that have since delisted. Every stock and every Wednesday carries equal weight.
Representativeness. Table 1 gives the sample by GICS sector beside the S&P Composite 1500: 7.9% of companies would have to change sector for the two to match exactly. By latest market value, 55% of the active companies are large (at least $10bn), 38% mid ($2–10bn) and 6% small. Because Stratum 2 was chosen from companies listed at construction, its history carries survivorship bias. Section 4 repeats the lead result among the stocks that were S&P 500 members on each date, the part of the sample largely free of that bias.
Companies in this study's sample, of them those since delisted, the size of the active companies, the sample's share of stock-weeks and the sector's share of the S&P Composite 1500.
| Sector | Sample | Delisted | Large | Mid | Small | Stock-weeks | S&P 1500 |
|---|---|---|---|---|---|---|---|
| Information Technology | 282 | 67 | 122 | 76 | 18 | 13.9% | 12.7% |
| Financials | 256 | 60 | 114 | 74 | 8 | 14.6% | 17.2% |
| Industrials | 255 | 53 | 126 | 67 | 11 | 15.9% | 17.5% |
| Health Care | 237 | 47 | 92 | 81 | 16 | 12.4% | 10.9% |
| Consumer Discretionary | 209 | 39 | 69 | 87 | 12 | 12.3% | 12.9% |
| Energy | 105 | 30 | 39 | 31 | 5 | 5.9% | 4.7% |
| Consumer Staples | 101 | 38 | 40 | 17 | 5 | 5.9% | 4.9% |
| Materials | 94 | 34 | 35 | 24 | 2 | 5.6% | 5.1% |
| Real Estate | 84 | 10 | 40 | 32 | 2 | 5.7% | 6.9% |
| Communication Services | 80 | 31 | 28 | 13 | 5 | 3.9% | 3.3% |
| Utilities | 60 | 13 | 35 | 12 | 0 | 4% | 4% |
| All sectors | 1,763 | 422 | 740 | 514 | 84 | 100% | 100% |
Sample: n = 1,763 of the 1,767 companies. Size by latest market value for the 1,338 active companies with one: large ≥ $10bn, mid $2–10bn, small < $2bn. S&P 1500 shares count the constituents of the S&P 500, MidCap 400 and SmallCap 600 (1,506 companies, lists read Sep 25, 2026). Sectors are each company's current GICS sector.
2.2Signals
| Signal | Definition | Since | Wednesdays |
|---|---|---|---|
| CEO or CFO purchase | The chief executive or the chief financial officer made an open-market purchase in the previous 30 days, counted once the Form 4 filing is public | Jul 30, 2003 | 1,192 |
| Cluster of insider purchases | Three or more insiders made open-market purchases in the previous 30 days, counted once the filings are public | Jul 30, 2003 | 1,190 |
2.3Measurement
Outcome. The return from the close on the Wednesday to the close 1, 5, 21 and 63 trading sessions later, on closes adjusted for splits and dividends, compared with the same day's median stock; half of all stocks beat the median by construction, so chance is 50 in 100 on every date. No delisting return is added.
Each Wednesday, the stocks showing the reading are scored against the same day's median stock. A state counts on every Wednesday it holds; a cross or breakout counts only on the Wednesday it happens.
The t-statistic uses non-overlapping dates only. A result is called proven when |t| is at least 3, it held in at least 60% of years and it is large enough to matter; with 1,470 tests across the studies, a looser bar would pass dozens by luck.
Full data and methods3Results
Figure 1 reads every horizon for both events. Stocks whose CEO or CFO had bought in the previous 30 days beat the median stock 49 times in 100 over the next session, 50 over the next week, 50 over the next month and 50 over the next three months; stocks with a cluster of three or more insider purchases, 49, 50, 50 and 50. Over the next session both sat a little below 50: the CEO and CFO purchases at 49.1 in 100 (t -2.3), faint and not reliable on its own, and the clusters at 48.7, just short of the bar for even a faint reading. Every other reading shows no measurable edge.
Share of stocks showing the reading that beat the same day's median stock, by horizon. The line at 50 is chance, the grey band the range chance alone produces; a filled square is a proven relation.
Each square is one calendar year; filled = a year in which the average stock showing the signal lagged the median stock over the next month. Years are counted, not shown in order.
A signal with an edge would fill most squares, or leave most empty.
Rank correlation inside each GICS sector over the next month, stocks ranked only against their own sector. Colour only where |t| ≥ 2.
Out of every 100 stocks whose CEO or CFO had just bought, 50 beat the median stock over the following month; out of every 100 with a cluster of insider purchases, 50 did (Figure 2). Both sit on the line a coin flip draws.
Two things may explain it. A purchase is public within days on Form 4 and widely tracked, so by the time most of these readings begin it is already known. And the academic evidence for insider purchases comes largely from smaller companies and longer horizons than the mostly large and mid-sized stocks and three-month window studied here.
4Robustness
Table 3 reads each event horizon by horizon: over the next month, stocks after a CEO or CFO purchase lagged the median stock in 15 of 24 years and stocks after a cluster of purchases in 12 of 24. Table 4 reads the same CEO-or-CFO flag as a rank correlation with the next month's return: -0.001 (t -0.7) across all stocks and -0.001 (t -1.2) among S&P 500 members.
Share that beat the median stock, its t-statistic on non-overlapping dates, and the years in which it pointed the same way.
| Horizon | Beat the median | t | Years, same way |
|---|---|---|---|
| CEO or CFO purchase, session | 49.1 | -2.3 | 16 / 24 |
| CEO or CFO purchase, week | 50.0 | 0.2 | 14 / 24 |
| CEO or CFO purchase, month | 49.5 | -0.4 | 15 / 24 |
| CEO or CFO purchase, three months | 50.3 | -0.1 | 13 / 24 |
| Cluster of insider purchases, session | 48.7 | -2.0 | 19 / 24 |
| Cluster of insider purchases, week | 49.9 | 0.9 | 11 / 24 |
| Cluster of insider purchases, month | 49.8 | -0.2 | 12 / 24 |
| Cluster of insider purchases, three months | 49.7 | -0.4 | 12 / 24 |
Rank IC and its t-statistic on non-overlapping dates.
| Sample | IC | t | Wednesdays |
|---|---|---|---|
| CEO and CFO purchases (count over 30 days), next month | |||
| All stocks, whole period | -0.0013 | -0.7 | 1,189 |
| By decade: 1995–2004 | 0.0016 | 0.4 | 75 |
| By decade: 2005–2014 | -0.0015 | -0.7 | 518 |
| By decade: 2015– | -0.0014 | -0.4 | 596 |
| S&P 500 members on the date | -0.0012 | -1.2 | 1,174 |
| Sectors with the overall sign | 8 / 11 |
5Limitations
- Insider purchases are read from SEC Form 4 filings, available here from 2003. The universe and its calendar are the same as every study's, back to Jan 4, 1995, but those earlier years carry no insider readings, so this study covers a shorter span than the price-based studies on the same universe.
- Only open-market purchases count; option exercises, grants and gifts are left out, and the size of a purchase is not weighed. Nor does the study separate routine insiders, who trade in the same month year after year, from opportunistic ones, the split Cohen, Malloy and Pomorski (2012) found to carry the information.
- Before costs. Averages exclude trading costs, taxes and market impact.
- Same-close timing. Returns start at the close the signal is computed from; a real trade would start later.
- Survivors among smaller companies. The non-index names were chosen from companies listed when the universe was built; no delisting returns are added.
6Conclusion
A purchase by a CEO or CFO is public within days and widely followed. Measured every Wednesday since 2003 against the same day's median stock, stocks whose CEO or CFO had just bought, and stocks where several insiders bought together, did not go on to beat other stocks by a measurable margin over a week, a month or three months. The purchase may say something about an insider's confidence; in this data it said nothing reliable about how the stock would fare against other stocks.
References
- Lakonishok, J. and Lee, I. (2001). Are Insider Trades Informative? Review of Financial Studies 14(1).
- Cohen, L., Malloy, C. and Pomorski, L. (2012). Decoding Inside Information. Journal of Finance 67(3).
- Benjamini, Y. and Hochberg, Y. (1995). Controlling the False Discovery Rate: A Practical and Powerful Approach to Multiple Testing. Journal of the Royal Statistical Society, Series B 57(1).
- Grinold, R. C. and Kahn, R. N. (2000). Active Portfolio Management, 2nd ed. McGraw-Hill.
- Harvey, C. R., Liu, Y. and Zhu, H. (2016). … and the Cross-Section of Expected Returns. Review of Financial Studies 29(1).
- Shumway, T. (1997). The Delisting Bias in CRSP Data. Journal of Finance 52(1).
Appendix A. Questions readers ask
- Does insider buying predict stock returns?
- Not in this data. Since 2003, stocks where three or more insiders made open-market purchases in the previous 30 days beat the same day's median stock over the next month 50 times in 100, and over three months 50 times, against 50 for a coin flip.
- Is a CEO's purchase a stronger signal?
- Not measurably. Stocks whose CEO or CFO bought in the previous 30 days beat the median stock over the next month 50 times in 100 and over three months 50 times. Over the next session they trailed slightly, a faint reading that is not reliable on its own. The study counts the CEO's and the CFO's purchases together.
- Why doesn't insider buying show an edge here?
- Two things may explain it. A purchase is public within days on Form 4 and widely tracked, so by the time most of these readings begin it is already known. And the academic evidence for insider purchases comes largely from smaller companies and longer horizons than the mostly large and mid-sized stocks and three-month window studied here.
- How was insider buying measured?
- Every Wednesday from 2003 to Aug 19, 2026, the stocks of the same universe of 1,767 US stocks every study uses were flagged when their CEO or CFO, or three or more insiders, had made open-market purchases in the previous 30 days, counted only once the Form 4 filing was public, and compared with the same day's median stock over the next 1, 5, 21 and 63 trading sessions.
Data availability and citation
Every figure in this paper is quoted from one frozen snapshot, published as JSON with the sample description, the robustness results and the test counts. The same snapshot feeds the research console, so the two cannot disagree.
Opulence Alpha Research (2026). When a CEO or CFO buys their company's stock, does it do better? Opulence Alpha Studies, Sep 25, 2026. https://opulencealpha.ai/studies/ceo-insider-buying
Research, not advice. A measured tendency across hundreds of stocks is a nudge for any one of them, never a forecast of its price.