After a lull, the ratio of insider buying to selling of their own shares increased in September.
Last month, insiders' buy-to-sell ratio rose to its highest level since May. In September, 659 executives and directors at 447 companies bought shares in their own companies, according to Washington Service, an insider-trading data analytics firm. By comparison, 1,367 insiders at 783 companies sold shares in their own companies.
Insiders typically sell more than they buy in a given month, in part because executives' compensation often includes stock, so they are likely to cash out when they need money.
CDT Capital Management's internal sentiment ratio jumped above the 75th percentile in September. The ratio measures insider trading activity, taking into account factors such as seasonality.
The increase in insider buying came as US stocks fell last month, with the S&P 500 Posting its biggest monthly drop since December.
"Insiders are not chasing gains in the summer and buying dips in the fall," CDT said in a note.
Investors typically pay attention to trading behavior reported by people inside a company because executives and board members typically have better insight into the company's prospects.