-- Q: I've noticed some stock transactions by insiders at EMC emc. Is that a good sign, bad sign or neither?
A: It's not a bad idea to take a look at what officers and directors are doing with their company's stock. After all, who knows better about a company's progress than the people running the show?
Tracking legal insider trading is easy. USATODAY.com's Money section provides a handy and free insider trading tool. Enter a stock name or ticker symbol in any Get a Quote box, and then click on the Insider Trading link on top of the stock price chart. Here are recent transactions involving EMC. You can see more if you click on Next Transactions at the bottom of the list.
Examining EMC's insider trading record, it looks like a number of executives were granted stock in the company on Aug. 20. This is pretty routine. Executives are paid in a number of ways, since there are limits to cash compensation. Shares are generally granted, and the recipient must hold them for a certain period of time before they can sell them.
As a general rule, reading the tea leaves of what insider transactions really mean is difficult. Executives are aware that their moves are watched by investors, regulators and academics. For that reason, if there is any gaming of the system, it's usually disguised a bit.
Remember, too, that executives buy and sell stock for many reasons. They might sell stock to raise cash to pay a child's tuition bill, which would tell you nothing about how they think about the company's future. Similarly, they might get stock as part of a compensation package, which doesn't mean the same thing as if they had bought the stock with their own money.
Matt Krantz is a financial markets reporter at USA TODAY and author of Investing Online for Dummies. He answers a different reader question every weekday in his Ask Matt column at money.usatoday.com. To submit a question, e-mail Matt at firstname.lastname@example.org. Click here to see previous Ask Matt columns.