Analysis of Insider Dip Buying Strategy Performance and Market Impact

On November 25, 2025, a Reddit user in r/stocks published an analysis of post-2008 insider dip buys using Form 4 filings and S&P data [2]. The analysis found that insider purchases during 10-30% stock dips significantly outperform the S&P 500, with returns improving for deeper drawdowns. However, the strategy exhibits higher volatility and lower win rates (~60% vs ~90% for S&P) [2]. Current market data shows corporate insiders are buying the S&P dip at the fastest pace since May 2025, with a buy-to-sell ratio of 0.5 [1]. Chris Zaccarelli of Northlight Asset Management noted that while insiders know their companies well, they do not necessarily excel at market timing [1]. Reddit community analysis further confirms that insider dip buys outperform by 6-8% over 12 months, with CEO/CFO purchases showing the strongest signals [3].

• The strategy’s upside skew (higher returns for deeper dips) creates a risk-reward tradeoff that may appeal to investors with higher risk tolerance [2][3].
• The current surge in insider buying aligns with historical patterns of potential outperformance, but investors should not rely solely on this signal without considering broader market conditions [1][2].
• Sector-specific variations in insider buying effectiveness are an understudied area, presenting opportunities for further research [0].

• Lower win rate compared to the S&P 500 increases the likelihood of short-term losses [2].
• Higher volatility may lead to significant drawdowns, making the strategy unsuitable for risk-averse investors [0].
• Market timing risk: Insiders may not correctly identify the bottom of a dip [1].

• Potential 6-8% outperformance over 12 months for stocks with insider dip buys [3].
• Deeper dips (20-30%) offer even higher returns, creating targeted investment opportunities [2].
• Monitoring insider buying trends can provide early signals of undervalued stocks [1].

Insider dip buying is a strategy with a clear risk-reward tradeoff. While it offers potential outperformance over the S&P 500, it comes with higher volatility and lower win rates. The current surge in insider buying is a notable market signal, but investors should combine this with fundamental analysis and market context to make informed decisions. Exact quantitative metrics from the original Reddit analysis are partially limited due to access restrictions, so further verification with academic studies or official filings is recommended [0][2].