Company executives may not know much about the stock market. But they know plenty about their own business.

That’s why many investors track their every move. When these insiders notify the Securities and Exchange Commission that they have just bought company stock, investors sit up and take notice.

Well, just last week, we saw more insider purchases than insider sales, according to InsiderInsights.com. The net positive reading hasn’t been seen in some time. In fact, the last time insiders posted such a bullish bet on stocks was in April 2009 -- just a month after the powerful rally began. Many of the recent buying transactions appear to be coming from companies that have seen their shares sharply pushed off their highs, even as the fundamental outlook for the company is unchanged.

But the folks at InsiderInsights bring up an important caveat: Executives at companies can be a bit naive when anticipating how their stock will fare in the near future. Their insider buying activities tend to pay off, but only over the medium or long-term. In fact, history has shown that an increasing number of insiders step in to buy shares even as the market falls further and further. So for many investors, it pays to brush up on the companies that see heavy insider buying, but hold off on jumping in until you think the market has stabilized.
There are a few events you can monitor to help you with your timing. First, take notice when several executives at a firm do some buying. Look for buying clusters by the chief executive officer, the chief financial officer and any board members.

Than, look at their track record. Various websites will tell you when insiders bought and sold in the past, and you can go back and see how those trades panned out. You want to mimic the insiders who have a history of buying their own stock closer to lows and selling closer to highs.

Not surprisingly, executives of oil and gas firms squarely focused on land-based drilling and oil and gas transport have been active buyers of their stock lately. That’s because they’ve been throw out in the same bathwater as their offshore-focused peers. For example, PetroQuest Energy (NYSE: PO) just saw more than $10 million in insider buying and Crosstex Energy (Nasdaq: XTEX) insiders recently spent $13 million on their company’s stock.

Insiders will sometimes buy their own stock even when it’s trading well above the lows, since they see a future that is even brighter than analysts expect. Insiders picked up more than $6 million in stock at American Superconductor (Nasdaq: AMSC) at around $30 a share, even though shares had been closer to $25 a few weeks earlier. In a similar vein, four different insiders bought a collective $8 million in stock at Loral (Nasdaq: LORL), a satellite services provider, even as shares sit at twice the 52-week low.