Corporate executives say optimistic things about their companies every day.

They appear on earnings calls, investor presentations and financial television programs to explain why the latest disappointing quarter is merely a temporary setback. They assure shareholders that the strategic plan remains on track. They remind everyone that the company has tremendous long-term opportunities.

Some of those executives may sincerely believe every word.

Others are simply doing what executives are paid to do.

Words are cheap. Stock is not.

When a senior executive reaches into his or her own pocket and spends $1 million or more buying company shares in the open market, we are dealing with something very different from corporate cheerleading. The executive is converting optimism into personal financial exposure.

That does not guarantee the stock is going higher. Nothing in the stock market comes with a guarantee, except that Wall Street will charge you a fee whether you make money or not.

A seven-figure insider purchase is still one of the more interesting signals available to individual investors, especially when the stock is trading well below its 52-week high.

Senior executives usually receive a significant portion of their compensation in restricted shares, stock options and other equity-linked awards.

That is important because not every increase in insider ownership represents a bullish investment decision. An executive may receive shares automatically under a compensation plan. Options may vest. Restricted stock may be granted by the board.

Those transactions can increase reported ownership without the executive voluntarily risking any additional capital.

An open-market purchase is different.

The executive makes a conscious decision to take cash that could have been invested almost anywhere else and use it to buy additional shares of the company. The transaction is generally reported on Form 4, which in most cases must be filed with the Securities and Exchange Commission within 2 business days.

That distinction matters.

We are not looking for executives who were handed shares. We are looking for executives who bought stock with their own money.

A small insider purchase may be symbolic.

A director earning several hundred thousand dollars a year can buy $25,000 worth of stock to demonstrate support for management. That purchase may generate a favorable headline, but it does not necessarily reveal much about the director’s conviction.

A $1 million purchase is harder to dismiss.

The actual significance depends on the executive’s wealth, compensation and existing ownership. A $1 million purchase means more to a chief financial officer earning $2 million a year than it does to a billionaire founder.

Even so, seven figures is usually enough money to create real consequences if the executive is wrong.

This introduces one of the most useful concepts in investing: skin in the game.

The executive is no longer merely asking shareholders to remain patient. The executive is joining them.

Senior executives do not possess perfect knowledge of the future.

They cannot control interest rates, recessions, commodity prices, wars, regulations or investor psychology. They can misjudge their industry just like anyone else.

They do, however, understand their own companies better than outside investors.

A chief executive usually has a deeper understanding of customer behavior, competitive conditions, employee morale and strategic opportunities. A chief financial officer has direct visibility into cash flow, debt maturities, margins, working capital and access to financing.

Outside analysts may build elaborate models using public information. Executives see the business operating in real time.

Insiders are prohibited from trading while possessing material nonpublic information. A legal insider purchase should not be interpreted as proof that an acquisition, earnings surprise or other major announcement is imminent.

The advantage is often more subtle.

An executive may recognize that the market has become too pessimistic about problems that are already widely known. The executive may see improving conditions that have not yet appeared clearly in reported results. Management may believe that the balance sheet is stronger, the assets are more valuable or the recovery prospects are better than the stock price suggests.

Insiders do not have to know exactly what will happen next quarter to recognize that their shares have become unusually cheap.

The most interesting insider purchases often occur after a stock has fallen sharply.

A company misses earnings. Guidance is reduced. A temporary operating problem becomes the only subject anyone wants to discuss. Analysts cut their price targets after the stock has already collapsed, because apparently that is what passes for foresight in some corners of Wall Street.

The stock may be 30%, 40% or even 60% below its 52-week high.

At that point, most investors are focused exclusively on what has gone wrong. They extrapolate recent disappointment indefinitely into the future.

An insider may have a different perspective.

The executive can compare the current crisis with prior operating cycles. Management may know which problems are fixable, which assets can be sold, which expenses can be reduced and which customers are likely to return.

A large purchase following a major decline can therefore function as a statement about valuation rather than a prediction about the next earnings report.

The executive may not be saying that the bottom is in.

The executive may be saying that the relationship between price and long-term business value has become attractive.

That is the sort of signal value investors should investigate.

Academic research generally supports the idea that insider purchases contain useful information, although the signal is far from perfect.

Research by Josef Lakonishok and Inmoo Lee found that insider activity could help predict returns at the individual-company level. The predictive effect was driven primarily by purchases, not sales, and was stronger among smaller companies.

A separate study by Leslie Jeng, Andrew Metrick and Richard Zeckhauser found that portfolios based on insider purchases generated abnormal performance, while insider sales did not demonstrate the same consistent profitability.

That difference makes sense.

Executives sell shares for many reasons. They may need to pay taxes, purchase a home, fund a divorce settlement, diversify an overconcentrated portfolio or finance a child’s education.

There is usually only one reason to buy stock voluntarily.

The buyer believes the expected return is attractive.

More recent research has also suggested that clusters of purchases by several executives may be more informative than isolated transactions by a single insider. When the CEO, CFO and multiple directors are all buying around the same time, the signal becomes more difficult to dismiss as one person’s optimism or poor judgment.

The evidence is not universally bullish. A 2026 analysis of roughly 1,400 insider purchases at S&P 500 companies found that the median stock gained about 2% during the month following a purchase, but only 15% fully recovered the losses suffered during the preceding 30 days. Large insider purchases often helped sentiment temporarily, but many failed to mark a lasting bottom.

That should surprise no one.

Insiders can recognize value and still buy too early.

Investors often assume an insider purchase has failed if the stock declines immediately afterward.

That is an unreasonable standard.

Executives are operating businesses, not running short-term trading desks. Their investment horizon may be measured in years rather than weeks.

A CEO may believe that a turnaround will require 18 months. A CFO may know that a major debt maturity is manageable, even though the refinancing will not occur for another year. A director may understand that a depressed real estate portfolio will recover eventually, without knowing when interest rates will cooperate.

The purchase can be fundamentally correct and still look terrible for several months.

That is why insider buying works best as a research signal, not a mechanical trading system.

The Form 4 should tell you where to investigate. It should not tell you to buy blindly.

The strongest setups tend to share several characteristics.

First, the purchase is made in the open market with the insider’s own money. Compensation awards, option exercises and automatic transactions carry much less information.

Second, the amount is meaningful. Seven figures gets our attention, but the purchase should also be evaluated relative to the executive’s compensation and existing ownership.

Third, the insider’s total stake increases materially. A $1 million purchase is less impressive when the executive already owns $500 million worth of shares.

Fourth, the stock has declined because of identifiable problems rather than an existential threat. A temporary earnings miss, cyclical downturn or investor overreaction can create opportunity. A collapsing balance sheet, accounting scandal or obsolete business model is something else entirely.

Fifth, the purchase is supported by other insiders. Cluster buying can indicate that confidence extends beyond a single overly optimistic executive.

Sixth, the company has sufficient financial strength to survive long enough for the thesis to work. Insider confidence cannot eliminate excessive leverage, refinancing risk or a genuine liquidity crisis.

Finally, valuation should offer a margin of safety. Insider buying is much more useful when the stock is cheap based on assets, normalized earnings or free cash flow.

Chief executives receive most of the attention, but purchases by chief financial officers can be especially revealing.

The CFO understands the numbers.

This executive knows the debt schedule, banking relationships, cash requirements and covenant restrictions. The CFO sees whether reported earnings are turning into actual cash. He or she understands which accounting adjustments are harmless and which ones should keep investors awake at night.

A large CFO purchase after a major price decline deserves careful attention.

The same applies when the chief executive and chief financial officer buy together. Research has not always found a decisive difference between the predictive value of CEO and CFO trades, but coordinated buying by multiple executives has shown stronger informational content than isolated transactions.

Summit Therapeutics

Summit Therapeutics (NASDAQ:SMMT) is exactly the sort of high-upside situation that makes this screen worth running. The oncology company’s future is tied primarily to ivonescimab, its potentially important cancer therapy, which also means the stock will remain volatile as investors react to clinical results and regulatory developments. That volatility has pushed the shares to roughly $14.41, more than 50% below their 52-week high of $30.98. 

Co-CEO Robert Duggan reported an indirect open-market purchase of 100,000 shares at $14.60 through a related trust, a transaction worth $1.46 million.

Co-CEO Maky Zanganeh also reported a 100,000-share purchase at the same price, while COO and CFO Manmeet Singh Soni bought another 50,000 shares for more than $722,000. 

Nobody knows the company’s opportunity and risks better than this leadership team. When the people closest to a potentially transformative oncology asset respond to a collapsing share price by buying millions of dollars’ worth of additional stock, aggressive investors should pay attention. SMMT is speculative, but the combination of enormous potential, a severely depressed share price and concentrated insider conviction gives the stock the kind of explosive rebound potential we are looking for. 

Hamilton Lane

Hamilton Lane (NASDAQ:HLNE) may be the most straightforward opportunity of the three. This is an established private-markets investment manager with deep institutional relationships, recurring fee revenue and long-term exposure to the continued expansion of private equity, private credit and infrastructure investing. 

The shares have been punished, falling from a 52-week high above $161 to roughly $84.26, a decline of almost 48%. Executive Co-Chairman Hartley Rogers responded by buying aggressively. Rogers purchased 110,932 shares in May at prices around $90 to $93, then returned in June to purchase another 38,290 shares for approximately $3 million.

This was not a director buying a token number of shares to create a favorable headline. Rogers is Hamilton Lane’s executive co-chairman, chairman of the board and a member of its investment committees. He understands the company, its clients and the private-markets cycle as well as anyone alive. His willingness to commit millions of additional dollars while investors are fleeing HLNE is an emphatic vote of confidence.

Wall Street sees a falling stock. Rogers appears to see a world-class private-markets franchise temporarily available at a fire-sale price. I am inclined to investigate alongside the man writing the checks.

Upstart Holdings

Upstart Holdings (NASDAQ:UPST) is the wild card, and potentially the most explosive rebound candidate. Upstart operates an artificial intelligence-powered lending marketplace designed to help banks and credit unions evaluate borrowers more effectively than traditional credit-score-based underwriting alone. The business has already demonstrated tremendous growth potential, but its dependence on credit conditions, loan-funding availability and capital-market sentiment has made the stock brutally volatile.

UPST currently trades near $29.50, roughly 66% below its 52-week high of $87.30. Co-founder and CEO Dave Girouard took advantage of that collapse by purchasing 170,240 shares for almost exactly $5 million. 

Chief Technology Officer Paul Gu also bought 100,000 shares worth approximately $3.9 million. 

That combination is difficult to ignore. The two executives who understand Upstart’s artificial intelligence models, technology and long-term lending opportunity better than anyone else just committed almost $9 million to additional shares. UPST is not suitable for widows, orphans or anyone who checks stock prices every 7 minutes. For investors capable of tolerating volatility, however, the combination of a battered share price, improving operating potential and massive founder-level insider buying could produce spectacular gains if Upstart’s lending platform regains momentum.

There is a temptation to treat insider buying as an easy shortcut.

The CEO bought $2 million worth of stock, therefore the shares must be cheap.

That is not analysis. It is mimicry.

Executives can be overconfident. Founders can become emotionally attached to businesses they created. Management teams can underestimate structural change. Directors can purchase stock primarily to reassure investors.

An insider purchase should never override the balance sheet.

It should never excuse deteriorating credit quality, impossible debt maturities, disappearing cash flow or questionable accounting.

The proper response to a seven-figure insider purchase is not, “The executive bought, therefore I should buy.”

The proper response is, “The person who knows this company best just made a meaningful financial commitment. What does that person see that the market may be missing?”

That question can lead to opportunity.

The ideal insider-buying setup is not merely a large purchase.

It is a large purchase inside a fundamentally sound but deeply unpopular company.

The stock is well below its 52-week high. The business has suffered a disappointment, but the balance sheet remains intact. Cash flow is temporarily depressed rather than permanently destroyed. The shares trade at a significant discount to a reasonable estimate of value.

A senior executive then spends $1 million or more buying stock in the open market.

That combination brings together behavior, information and valuation.

The insider may still be early. The stock may continue falling. The market can remain irrational for an annoyingly long period, especially when algorithmic traders, momentum funds and panic-stricken shareholders are all trying to exit through the same narrow door.

However, a large insider purchase tells us that someone with detailed knowledge of the company believes the current price offers an attractive long-term proposition.

That is not proof.

It is evidence.

In a market filled with forecasts, opinions, price targets and promotional nonsense, evidence backed by a seven-figure personal check is worth investigating.