A Chief Executive might buy shares in their own co
Post# of 86949
(Total Views: 511)
Posted On: 09/01/2022 7:23:04 AM
A Chief Executive might buy shares in their own company even though the market has the stock price falling for any number of reasons, but two of the commonest reasons are:
First, they see the stock as cheap. As CEO they know what is going to happen to the company in the next few weeks. Their inside knowledge about the companies prospects can be used to purchase a stock which has gone on sale. As long as the purchase is properly declared and noted they can buy the stock for their own portfolio.
The second reason may be to show the market that the company stock is being undervalued by the market. A CEO buying stock with their own cash is a strong sign that the company is doing well and that the market is wrong about prospects. Some companies even contract their senior officers to purchase a quantity of shares in the company in order to consider their various actions on the board of management more carefully. As stock holders in the company they hope that a CEO will be more thoughtful of the value of the stock than someone who has no interest due to their lack of skin in the game.
First, they see the stock as cheap. As CEO they know what is going to happen to the company in the next few weeks. Their inside knowledge about the companies prospects can be used to purchase a stock which has gone on sale. As long as the purchase is properly declared and noted they can buy the stock for their own portfolio.
The second reason may be to show the market that the company stock is being undervalued by the market. A CEO buying stock with their own cash is a strong sign that the company is doing well and that the market is wrong about prospects. Some companies even contract their senior officers to purchase a quantity of shares in the company in order to consider their various actions on the board of management more carefully. As stock holders in the company they hope that a CEO will be more thoughtful of the value of the stock than someone who has no interest due to their lack of skin in the game.
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