Do insider buys or analyst revisions predict stock returns?

How this was measured

Every Wednesday since 1995, the stocks in our universe are compared on the signal and followed for 1, 5, 21 and 63 trading sessions. A reading counts when the stock beat the median stock on the same day, so chance is always 50 in 100 and a market-wide rally cannot flatter the result. The strength of a relation is a rank correlation (IC) between the signal and the forward return; its t-statistic is taken on non-overlapping dates, and a relation is called proven only when |t| is at least 3, it held in at least 60% of years and it is large enough to matter. With hundreds of tests, a looser bar would pass about one in twenty by luck. Studies run Sep 24, 2026; outcomes measured through Aug 21, 2026.

Research, not advice. A measured tendency across hundreds of stocks is a nudge for any one of them, never a forecast of its price.

Questions

Does insider buying predict stock returns?

Not in a way we could measure. Across 22 measures built from Form 4 open-market purchases and sales on US stocks since 2003, none showed a reliable edge over the next day, week, month or three months: 0 of 88 readings passed our bar. 11 measures showed a faint tilt somewhere, not reliable on its own.

Does CEO insider buying predict stock returns?

In this data, no. When a CEO or CFO had bought shares in the open market in the last 30 days, the stock showed no measurable edge over the next week, month or three months, measured on US stocks since 2003. The only reading was a faint one-session tilt, not reliable on its own.

Is cluster buying by insiders a reliable signal?

Not one we could measure. When three or more insiders bought within 30 days, the stock showed no measurable edge over the next week, month or three months on US stocks since 2003; over the next session, a faint tilt that was not reliable on its own.

Do analyst upgrades predict stock returns?

Barely. Net upgrades over the last 63 days, upgrades minus downgrades as a share of all rating actions, showed a faint tilt over the next week and no measurable edge over a month or three months, on US stocks since 2012. Net price-target raises and the gap to the median price target showed no measurable edge at any horizon.

Do stocks with fewer analysts do better?

Slightly, as a tilt across many stocks. Since 2012, the fifth of US stocks covered by the fewest research firms beat the median stock over the next three months 52 times in 100; the most-covered fifth, 49 times. Measured across every stock rather than only the two end fifths, the relation kept its direction in 14 of 15 years. Coverage tends to rise with company size, and this study did not separate the two.

Does this mean insiders have no information?

No. A Form 4 purchase is a real event, and this study asks a narrower question: whether, once the filing was public, stocks with more insider buying beat the median stock within three months. On US stocks since 2003, 0 of 88 readings passed our bar. Longer horizons and single filings read in context were not tested.