What Insiders Are Really Doing: A Smart Money Watchlist

The smart money is sending a clear, cautious signal. Across the entire U.S. market, the Insider Buy/Sell Ratio has hit a low of 0.29 by June 2025, a level well below its long-term average of 0.42. This isn't just a dip; it's a sustained shift. The ratio has declined by 12% compared to the same period last year, showing that executives and directors are consistently selling more shares than they are buying. For CEOs specifically, the ratio is slightly higher at 0.44, but still below historical norms, suggesting even top leaders are locking in gains.

This pattern is a reliable signal because it's backed by decades of research. Insiders are consistently the most informed traders, and their actions have a proven track record. Studies show they beat the market by about 5% on a one-month horizon, with returns that are often triple the market's. This isn't noise; it's a disciplined edge built on skin in the game.

The signal holds even in volatile times. During the pandemic, when markets were in turmoil, insider trades provided excellent forecasts. When most investors were selling, many insiders were buying, and those purchases preceded large increases in the stock market. Conversely, when insiders sold, it often marked a top. In a time of high uncertainty, this historical alignment of interest between insiders and shareholders is a powerful data point.

The bottom line is that a market-wide buy/sell ratio this low suggests a strategic re-evaluation. Smart money is taking profits and diversifying, a move that often precedes a period of consolidation or a shift in sentiment. For investors, the signal is straightforward: when the people who know the most are selling more than buying, it's a red flag to watch closely.

The Mechanics of the Move: Why Insiders Are Selling

The surge in insider selling isn't random. It's a calculated response to a difficult environment. Executives are locking in gains from the strong market runs of 2023 and 2024, a move that makes sense amid ongoing market volatility and the Federal Reserve's sustained higher interest rates. These conditions pressure valuations and margins, making it prudent to secure paper profits. The low market-wide Insider Buy/Sell Ratio of 0.29 is the direct result of this strategic re-evaluation by those with the most to lose.

A key structural driver is the rising use of 10b5-1 plans. These pre-set trading schedules allow executives to sell shares at predetermined times, removing the appearance of timing the market. Adoption is surging, with 97% of public companies reporting insider use in the most recent fiscal year. This institutionalization of selling provides a steady stream of trades, contributing to the overall volume. Yet, this convenience comes with a cost. The SEC's 2022 amendments to Rule 10b5-1 have heightened oversight, and companies report that this has added administrative complexity. In other words, the smart money is using a more regulated tool to exit positions, but the process is now more cumbersome.

The selling is also highly selective, reflecting sector-specific pressures. While insiders are broadly cautious, their actions reveal where they see the most risk. In high-flying sectors like technology and consumer cyclicals, the selling has been accelerated, as executives cash out of strong performers. Conversely, insider buying has been strategically concentrated in declining sectors like energy and advertising, where some see value. This divergence shows the selling isn't a blanket lack of confidence, but a targeted portfolio rebalancing.

The bottom line is that executives are navigating a complex landscape. They are taking profits in a volatile, high-rate world, using structured plans that are now more regulated. For investors, this means the selling signal is layered: it's a mix of profit-taking, risk management, and a search for better value elsewhere. The smart money isn't just selling; it's repositioning.

Spotlight on Recent Whale Activity: A Closer Look

The market-wide signal is clear, but the real story is in the details. To understand what the smart money is doing, you need to look past the headlines and examine the actual trades. Recent filings reveal a pattern of large, strategic moves that tell a more nuanced story than a simple buy or sell ratio.

On one side, we see a significant sale. Last week, Paul Andrew Moore, the Chief Scientific Officer of Zyme, sold 9,560 shares at $22.67 each. That's a substantial chunk of his holdings, worth over $216,000. The key detail here is that this was part of a 10b5-1 automatic trading plan. This isn't a panic sell; it's a pre-arranged exit, likely tied to a long-term compensation structure. It shows that even at the executive level, the disciplined process of locking in gains is in full swing.

On the flip side, there was a massive, concentrated buy. In August, EcoR1 Capital, LLC, a director of AKTS, purchased a staggering 2,077,779 shares at $18.00 each. That single transaction was worth over $37.4 million. This isn't a small bet; it's a whale wallet moving. It demonstrates that while many insiders are selling, others are deploying significant capital, often with a long-term view.

The presence of both large buys and sells in the same data stream is the critical lesson. It shows that the overall market-wide ratio is a net figure, masking a lot of individual strategy. The smart money isn't monolithic. Some are taking profits and diversifying, while others are doubling down on specific opportunities. The real signal isn't in the headline of a single sale or buy, but in the total skin in the game. When you see a CEO selling a large block via a 10b5-1 plan while a director accumulates millions, it suggests a market where insiders are actively repositioning, not just fleeing.

Catalysts and Risks: What to Watch Next

The smart money is in a holding pattern, but the setup for a shift is clear. The key forward-looking signal to watch is a sustained rise in the market-wide Insider Buy/Sell Ratio above its long-term average of 0.42. That level would signal a return of insider optimism and could precede a broader market move. For now, the ratio's continued decline suggests insiders are still more focused on securing gains than on building new positions.

Regulatory shifts are another major catalyst. The SEC has undergone a significant shift in priorities under the new administration, abandoning its climate disclosure rules and focusing on easing burdens for smaller companies. This could indirectly affect insider trading by changing the reporting landscape. More directly, Congress has extended Section 16 reporting obligations to foreign private issuers, increasing transparency. While this doesn't change the mechanics of insider buying and selling, it adds a layer of scrutiny and could influence how executives time their trades.

The biggest risk is misreading the trend. A low buy/sell ratio is a powerful signal, but it is not a definitive predictor of a market downturn. As the evidence shows, the pattern is one of strategic re-evaluation, not panic. Executives are locking in profits from strong runs, using structured 10b5-1 plans, and hunting for value in declining sectors. This disciplined profit-taking is a rational response to high rates and volatility, not necessarily a call for a crash.

The bottom line is that the smart money is waiting. They are taking their chips off the table in overvalued areas while some are quietly placing bets elsewhere. The next move depends on two things: whether the ratio starts to climb back toward 0.42, and how regulatory changes alter the incentives and ease of insider trading. For now, the signal is clear-insiders are cautious, but they are not running for the exits.