When I am deciding, I typically look at it in reverse. First I look for insider buying, then I try to see if the company is indeed undervalued.
Insider trades are a huge part of how I find investment ideas. Insiders know more than you do. Period. Following them is almost always a good idea. But how do you discern good and bad insider buying signals? (for yes, there are good and bad insider signals to decipher). An excerpt from the book Quantitative Value explains it well. ...It is difficult to determine if you should invest in a company simply because it is undervalued.
Any tom, dick or harry can arrive at a company being undervalued and there are many ways to do it. It’s primary 5 mathematics at best.
The hard part is deciding what to do once you have a company that is undervalued.
Do you invest or no? How do you make the decision?
