A founder bought his own company's shares after cutting the dividend 45%. The company then sold $2.9 billion of buildings to pay down debt.
He may well be right in the end. But if you had treated that purchase as the signal — if you had read "the founder is buying" as "the bottom is in" — you would have been reading something the transaction did not say.
Insider buying is the most over-read number in investing, and the reason is simple: it feels like a secret and it is a public filing.
Same action, completely different information
| Alexandria · 30 Jun 2026 | LVMH · 17 Aug 2026 | |
|---|---|---|
| Who bought | The founder | The controlling family |
| The situation | ~71% below the 2021 peak, ~0.5× book, $1.4bn of write-downs, dividend just cut 45% | 49% below the April 2023 peak, after seven straight quarters of decline in the main division |
| What happened to the business | Kept shrinking — selling ~$2.9bn of buildings in 2026 after ~$1.8bn in 2025 | The division earning 71% of group profit returned to growth; margin held at 22.5% |
| The likely motive | Conviction, or a founder's attachment — unknowable from outside | Control. The stake crossed 50.01% — a threshold, not a price |
| What the buy told you | Very little | Very little about value — a lot about intent |
Look at the fourth row, because it is the part almost nobody separates. Crossing 50% is a legal and strategic act. A family consolidating permanent control of the business it built would do that across a wide range of prices — the falling share price made it cheaper, it did not make it the reason.
Which does not make it uninformative. It tells you something genuinely useful: this family intends to own this company permanently. That is worth knowing. It is simply not a statement that the shares are undervalued today.
Insiders know their business far better than you do. That is a different skill from knowing what their shares are worth, and they practise it far less often.
The most common one is the most convincing
A founder buying his own declining company is the textbook false positive, and it is persuasive precisely because of everything that is genuinely admirable about it.
He knows the assets better than any analyst. He has personal capital at risk. He is buying when everyone else is leaving. Every one of those is a point in his favour — and none of them is evidence about the next three years, because the thing that makes him credible is the same thing that makes him attached.
Our report was blunt about the position: a cheap asset with still-falling fundamentals. Raising cash by shrinking. The insider buy sat on top of that, and did not change any of it.
Four filters, in order of usefulness
- Size relative to that person's own wealth, not relative to the company. A chief executive putting a year's pay into the open market is saying something. A director buying a token amount is not, and the headline treats them identically.
- Open-market purchases only. Exercising options, or shares received as compensation, are not purchases — they appear in the same filings and get counted the same way by most summary tools.
- Operational visibility. A divisional head who sees the order book knows something specific. A non-executive director who attends six meetings a year is reading roughly what you are reading.
- Timing against the news. A purchase when nothing has happened is information. A purchase a week after good results is a decision made with the same facts you have, and often with an eye on how it will read.
Our LVMH report named a risk the family's purchase says nothing about: Bernard Arnault is 77, has five children, and there is no announced successor.
Buying more shares is in fact entirely consistent with that risk — it is what you would do if you were arranging permanent family control ahead of a succession. The purchase and the risk point the same way, and a reader using the purchase as a bullish signal would have taken it as reassurance.
Where it belongs in a decision
Insider buying is corroboration, never a thesis. It can raise your confidence in a case you built for other reasons. It cannot be the case.
The practical test is a simple one. Write down why you want to own the business, with the insider purchase removed from the page. If what remains is enough, the purchase is a welcome extra. If what remains is not enough, you do not have an argument — you have somebody else's trade.
And note what our own reports did with these two. On LVMH the conclusion came from the division returning to growth, the 22.5% margin and free cash flow near a record — the family's buying was mentioned last. On Alexandria the founder's buying was noted and the verdict still described falling fundamentals. In both cases the purchase was evidence. In neither was it the reason.
A controlling family past 50% as the cycle turned, and a founder buying into a business still shrinking.
What each company was actually doing while the insiders were buying.
Frequently asked
Does insider buying mean a stock will go up?
No, and the counter-example is easy to find. Alexandria's founder was buying while the company sat about 71% below its peak at roughly half of book value, having just cut the dividend 45% — and it went on selling billions of dollars of buildings to reduce debt. He may still be proved right. What his purchase did not do was tell you the decline had finished.
Why is a controlling family buying different from a manager buying?
Because the motive may be control rather than value. When the Arnault family took its LVMH stake past 50% during a share price fall, that is a threshold with legal and strategic meaning quite separate from whether the shares are cheap. A family consolidating control would buy at many prices; a manager spending their own bonus has fewer reasons to.
What kind of insider buying is actually informative?
Unusual size relative to that person's own wealth, by someone with operational visibility, in the open market, when nothing obvious has just happened. The least informative is a small, routine purchase by a director shortly after good news, which is close to free advertising. Size and timing carry the information, not the fact of the transaction.
Should I buy a stock because insiders are buying?
Not on its own. Treat it as corroboration of a case you built for other reasons — it raises confidence in a thesis you already hold and cannot substitute for one. Insiders know their business far better than you and are not thereby good at forecasting their share price, which is a different skill they practise rarely.