Where the Smart Money Is Actually Moving

The smart money isn't following the headlines. It's moving capital where the data shows real conviction, while insiders are quietly taking money off the table. The divergence between institutional hype and insider skin in the game is the clearest signal for 2026.

On one side, you have a powerful structural tailwind. The broad money supply, or M2, remains near record highs and shows no sign of shrinking. This persistent liquidity is the foundation for inflationary pressure, which in turn fuels demand for hard assets and inflation-hedging strategies. The institutional survey confirms this is the backdrop for capital allocation. 84% of institutional investors expect to increase sustainable assets under management in the next two years, with energy efficiency and renewables as top priorities. This isn't just ESG virtue signaling; it's a calculated bet on long-term financial performance and risk management in a high-money-supply world.

Yet, the smart money is also exiting some of the hottest, most speculative plays. Look at the rare earth and nuclear sectors, which saw explosive gains in 2025. Despite that, insiders have been selling. MP Materials and Oklo have seen sizable insider selling, but a meaningful portion occurred under 10b5-1 plans. The more telling sales are the non-10b5-1 trades, where executives sold below current prices. For Redwire, the January 2026 selling stands out as large, concentrated, and not tied to pre-set plans. This is a bearish signal from those who know the company's true value. The pattern is clear: while institutions are allocating to sustainable themes, insiders in volatile, high-growth sectors are taking profits.

The bottom line is a split signal. Capital is flowing into sustainable infrastructure, backed by a structural money supply trend. At the same time, insiders are exiting the very stocks that fueled the 2025 rally, suggesting they see limited upside or heightened risk. In a market where hype often leads, the real signal is in the filings.

AI and Power: The Structural Tailwinds and Skin in the Game

The institutional playbook for 2026 is clear. AI is the top driver, and communication services stocks are the prime beneficiary. Fidelity portfolio managers see the evolution of AI as the most important sector catalyst, with the monetization of AI models still in its early innings. Communication services stocks are tracking to be the best performing sector in 2025 thanks mostly to the AI trade, and that momentum is expected to continue. The Schwab Center for Financial Research echoes this, rating communication services as Outperform for the next year. This isn't just a theme; it's a structural tailwind fueled by massive, ongoing spending from hyperscalers on the "picks and shovels" of AI infrastructure.

Yet, the smart money is also looking beyond the hype to the physical power needed to run it. The buildout of AI data centers is creating a key structural demand for power generation. This is a tangible, long-term need that institutions are betting on. However, the near-term picture is complicated. Power prices remain highly weather-dependent, creating volatility that can mask the underlying demand trend. The institutional view is forward-looking, but the path to realizing that demand is not a straight line.

This is where the skin in the game gets interesting. While institutions are allocating to AI and power themes, the insiders at some of the most volatile stocks in these high-growth sectors are taking money off the table. Look at the pattern: MP Materials and Oklo have seen sizable insider selling, but a meaningful portion occurred under 10b5-1 plans. The more telling trades are the non-10b5-1 sales, where executives sold below current prices. Redwire's January 2026 selling stands out as large, concentrated, and not tied to pre-set plans. This is a bearish signal from those who know the company's true value.

The bottom line is a split alignment. Institutions are placing a structural bet on AI and the power it requires, rating communication services as a top performer. At the same time, insiders in volatile, high-growth stocks are exiting, suggesting they see limited upside or heightened risk. In a market where hype often leads, the real signal is in the filings.

Catalysts and What to Watch

The smart money's positioning is clear, but the setup is fragile. The structural tailwinds of a bloated money supply and AI-driven demand are real, yet they are being met with a wave of insider profit-taking. To see if this divergence holds or breaks, watch these three forward-looking signals.

First, monitor Form 13F filings for shifts in institutional accumulation. These quarterly reports are the official record of what large funds are buying and selling. The SEC requires institutional investment managers to file quarterly Form 13F reports that list equity assets under management. Track the big players in AI, clean energy, and defense. Are they doubling down as expected, or are they quietly trimming positions? A sustained increase in holdings for a company like Redwire, despite its recent insider selling, would signal institutional conviction that insiders are missing. Conversely, a broad retreat from volatile sectors would confirm the smart money is rotating into safer, more structural plays.

Second, watch the money supply and inflation data. The entire structural backdrop hinges on this. The institutional view assumes the high-money-supply environment will persist, fueling demand for hard assets. The money supply didn't shrink after "quantitative tightening" and has resumed climbing into 2024–2025. If M2 data shows a sustained decline, it would undermine the core thesis for inflation-hedging strategies. More immediately, look for a re-acceleration in CPI or PCE data. A return to hotter inflation would validate the institutional bet on real assets and power stocks, while cooling prices could pressure those holdings.

Third, track insider trading activity, especially non-10b5-1 sales. This is the leading indicator for sentiment in volatile areas. The pattern is telling: MP Materials and Oklo have seen sizable insider selling, but a meaningful portion occurred under 10b5-1 plans. The more concerning trades are the non-10b5-1 sales made below current prices. Redwire's concentrated January selling stands out as a prime example. Watch for similar moves in other high-growth stocks. A surge in non-10b5-1 sales across the board would be a powerful warning that insiders see the risk/reward tipping sharply against them, regardless of institutional hype.

The checklist is simple. Every quarter, pull the latest Form 13Fs for your watchlist. Every month, check the M2 and CPI releases. And watch the SEC's EDGAR database for new Form 4 filings, flagging any large, non-10b5-1 sales. The smart money is moving; follow the data to see where it leads.