2 Stocks to Buy and 2 to Sell, According to InsidersVIEW IN BROWSER Tom Yeung here, with your Sunday Digest. All top investors rely on signals to know when to buy and sell.
Some prefer watching “smart money” flows, as Louis Navellier does. Others use seasonal factors, as our partners at TradeSmith do. Meanwhile, I use insider transactions as my preferred metric. The strategy works. Once investors find a winning signal, even the wildest trading systems can become consistent. Waiting for the right signal forces traders (and algorithms) to hold out for only the best opportunities while avoiding low-quality ones. For instance, I wrote in February to sell 11 separate stocks that insiders were suddenly dumping. Over the following month, these 11 companies lost 9% on average – a favorable outcome for those who got out (or sold short). Insider buys offer similarly powerful signals, as my flagged stocks last November show. So, here’s an interesting question: What if you could combine multiple signals into a single strategy? Presumably, you would have even better results. Weaker signals can get overruled by stronger ones, and the best-of-the-best picks soon rise to the surface. In quant parlance, that’s called an “ensemble model” (or “multifactor model,” depending on the specifics). On Main Street, we know it as the “wisdom of the crowd.” Stansberry Research’s Josh Baylin has put a new name to this: the Shadow Data Indicator (SDI). His new system combines thousands of different signals and data points into a clear picture. This system tracks hidden “Shadow Data” across roughly 145 tech companies and builds a “mosaic” that reveals what to do next. It’s a strategy that’s done incredibly well. By focusing on these 145 names and holding them for only 90 days at a time, in recent back-tests, the former hedge fund trader found at least 442 winners over the past eight years, including:
Datadog Inc. (DDOG), which jumped 187% in 90 days … Lyft Inc. (LYFT), which ran up 159% … Etsy Inc. (ETSY), which jumped 132% … And Coinbase Global Inc. (COIN), which jumped 106% after being flagged by Josh’s SDI. This approach mirrors the systems he used in his days at SAC Capital (Steve Cohen’s fund). Now, I can’t reveal picks from this system here today. You’ll have to watch Josh’s new special presentation for that, which you can do by clicking here. But what I can do is offer you several more buy and sell recommendations from my own favored signal: those from insider transactions.
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2 Stocks to Buy…It’s been a surprisingly quiet month for insider buying signals. Most purchases have focused on low-quality picks or risky ventures like Better Home & Finance Holding Co (BETR). I’m not keen on recommending a company where the CEO fired 900 employees over a Zoom meeting and then called the remaining a “bunch of DUMB DOLPHINS.” (Instead, my top pick in that space is Rocket Cos. Inc. [RKT], which you can read up on here.) However, some signals have emerged. Stock to Buy #1 The first one is ThredUp Inc. (TDUP), an online consignment firm that reminds me greatly of RealReal Inc (REAL), a stock I flagged in 2022, long before its meteoric 500% recovery. Here’s why. ThredUp runs a straightforward business. It’s an online service that accepts used clothing via a “Clean Out Kit,” and then sorts, evaluates, and presents clothes for selling online. Sellers earn anywhere from a few dollars to $30 for items that would have otherwise gone into the trash. Meanwhile, buyers can save anywhere from 50% to 80%, compared to new clothing prices… all while enjoying the quality certification that ThredUp provides. The company has become noticeably popular, especially among Gen Z shoppers. Revenues rose 18% in the most recent quarter, and active buyers jumped 30% to 1.65 million. The firm flipped to positive cash flows in 2025 and could break even on a net income basis as early as 2028. Why would a shopper roll the dice on an eBay listing when ThredUp does the vetting for you? Now, I must admit that it’s never quite been the right time to buy ThredUp. Shares dropped 13% the last time I recommended the stock in October, despite being flagged by a social heat score. (Its social media popularity didn’t translate to higher stock prices at the time.) And the stock remains 85% below its all-time high reached in 2021 on waning interest in pandemic-era stocks. But like RealReal in 2022, ThredUp’s shares now price in a lot of bad news given its fantastic growth rate. And now that a director on its board has finally made a purchase, it’s time to reconsider this down-and-out stock. If things go well, ThredUp is a company with potential 500% upside hiding in plain sight. Stock to Buy #2 The second company is Nike Inc. (NKE), another firm that’s seen share prices fall sharply. Now, there’s admittedly a lot to dislike about this longstanding athletic footwear and apparel firm. Under former CEO John Donahoe, Nike executed one of the worst strategic pivots in retail history by cutting its presence at physical stores and becoming reliant on recycled classics like Dunks and Air Jordan 1s. Since 2021, these cost-saving, profit maximizing strategies alienated customers and triggered a 75% collapse in stock prices. Nike’s C-suite has been a revolving door of managers ever since. The firm might finally be turning a corner. Under new CEO Elliott Hill, Nike has aggressively cleaned out its sales channels and introduced new products to compete against upstarts like Hoka and On. Hill has cared little about satisfying Wall Street in the short term, preferring instead to accept shocks like a double-digit decline in Greater China sales to clear out old inventory at bargain-basement prices. That will help greatly with turning the sportswear behemoth around. Nike’s previous turnaround efforts were too slow and too marginal. It was like ripping off a mile-long bandage a quarter of an inch at a time. Under Hill, Nike is finally taking the pain all at once so it can focus on innovation and growth once more. A major purchase by a director last week makes the case that at $42, Nike’s stock is now too cheap to ignore. Long-term investors should expect perhaps a 2X return over the next three to four years. … And 2 Stocks to SellMeanwhile, the “insider sell” signal is flashing a lot brighter. This is especially true in sectors that should be doing well, such as AI and crypto. Let’s take them in order and start with AI. Stock to Sell #1 In February, I warned readers that insiders seemed unusually bearish about AI data center firm CoreWeave Inc. (CRWV). Here’s from that update: CoreWeave’s sales have all been the 10b5-1 type, but their pace of selling has been astonishing. Many sales happen as soon as the shares are awarded, a historically bearish sign:
Chief Development Officer: Sold almost 1 million shares Chief Strategy Officer: Sold roughly 770,000 shares CEO: Sold roughly 300,000 shares Shares fell 15% over the following month. CoreWeave’s recent recovery now presents a second opportunity to sell shares. The stock recently rose back above $90 for the first time since February, and insider sales are once again signaling investors to get out at the $100-level. In April alone, we’ve seen:
Chief Strategy Officer: Sold more than 2.5 million shares Chief Development Officer: Sold roughly 330,000 shares CEO: Sold about 444,000 shares These sales are particularly revealing because CoreWeave’s industry should be doing well. Demand for AI data centers is surging, and analysts expect CRWV’s revenues to more than double to $12.4 billion this year, up from $5.1 billion in 2025. However, CoreWeave’s losses are also expected to double this year. Insiders are selling shares at incredible speed, and that tells me that far better AI bets exist elsewhere. (Top picks here from me include Akamai Technologies Inc. [AKAM] and PayPal Holdings Inc. [PYPL], despite a recent pullback in the former) Stock to Sell #2 My second stock to sell today is Circle Internet Group Inc. (CRCL), the company behind the wildly popular stablecoin USDC. In theory, stablecoins are a perfect business. Companies like Circle take customer deposits by issuing dollar-backed tokens and then invest the proceeds in short-term Treasurys. The interest earned is kept by Circle, while the principal is returned to customers whenever they ask for it back. Circle is essentially a bank that can issue its own currency. Now, one potential issue with stablecoin issuers is greed. Much like banks, stablecoin companies can invest customer deposits into higher yielding assets. These longer-dated Treasurys and money markets can lock up funds, raising the risk of a bank run if customers ask for their money back all at once. However, the bigger issue at Circle is its reliance on the Sky, Binance, and Ethena platforms. These three platforms, which are responsible for around 80% of Circle’s growth, have distribution deals that eat into Circle’s cut of interest revenues. That means Circle’s margins are declining … right as a new Federal Reserve chairman is about to start his job. If Kevin Warsh cuts interest rates as many expect (reducing the interest “spread” Circle can earn), then up to a third of Circle’s revenues could vanish. That’s likely why insiders are continuing to exit their positions today. Since the start of April, insiders have sold 67,667 shares through 10 different 10b5-1 plan sales. While these are preplanned events, the sheer volume suggests insiders set up these schemes expecting the stock to decline. This is not what you want to see at a high-growth, high-potential company. And so, I would recommend investors follow the lead of the insiders. If the stock isn’t good enough for its management, it’s probably not good enough for you either. Using the “Shadow Data” Approach to Combine SignalsEvery investment signal is like a “window” that lets you see where a stock might go. Some provide larger openings. Cluster insider purchases (where multiple execs and directors buy in all at once) are some of the best bull signals I know. To me, these massive windows invite you in as a shareholder. Others offer smaller windows. “Shadow Data” like web traffic and social media mentions might not instantly change the course of an e-commerce firm. Nevertheless, combining these windows together eventually creates a mosaic that creates a far clearer picture than any individual piece can offer. That’s what makes Josh Baylin’s Shadow Data Indicator system so compelling. Over the years, he’s built over 100 different models to examine billions of data points to find the optimal combination of these tiles. Even better, he’s focused this massive amount of research into analyzing an elite group of 145 tech firms where his SDI strategy works best. In his Market Tremors 2026 presentation, Josh breaks down this system in detail — including the “Shadow Data” signals it tracks and how it identifies opportunities most investors never see. It’s designed for shorter-term moves… and offers a very different way to approach today’s market. You can watch the full presentation here and decide for yourself. Until next week, Thomas Yeung, CFA
Market Analyst, InvestorPlace P.S. I’ve spent years relying on insider activity as a signal — and it works. But what Josh is doing takes that idea further by combining multiple signals into a single system. Instead of relying on just one edge, it pulls from many. In a market that’s moving this quickly, that kind of approach is worth understanding. You can check out his full presentation here. |
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