What Happens After an Insider Buys? Evidence From 47,458 Open-Market Purchases

I went through 47,458 insider buys. The biggest ones were actually the worst.

I have always paid attention when an insider buys stock, especially when it is a large purchase or the first one in years. So I pulled the open-market buys from 2020 to August 2025 to see whether either of those things was actually useful.

**Short answer: not really.**

A year after the purchase, the stocks did better than the median listed stock but worse than the S&P 500. More importantly, I got a similar result when I moved the starting date six months or a year forward. It looks more like insiders tend to buy a certain type of company than the purchase itself being a catalyst.

I also found 858 cases where nobody at the company had bought for more than two years. Their median return over the next year was just 0.74%, trailing the typical S&P 500 constituent by 6.55 points. The same lag showed up away from the purchase date, so I would not treat the first buy back as either a buy or short signal.

The strange part was purchase size. The largest 10% of buys did much worse than the smallest 10%, and that difference was not there in the placebo windows.

I still think insider buying is worth looking at, but more as a reason to investigate the company than a reason to buy it. A multimillion-dollar purchase does not seem to be a stronger signal just because the number is bigger.

The sample only covers 2020–2025, has survivorship bias and is not risk-adjusted, so I would want to see it tested over a longer period.