When CEOs bet big on their own stock, liquid names paid and thin ones did not

Across 19,978 open-market purchases by chief executives filed from 2016 to September 2025, the average stock returned +16.5% over the following twelve months against +15.0% for an index of same-size companies. Directors did better: +19.1% against +15.5%. The typical CEO purchase returned +1.9%, the typical director purchase +7.2%.

A CEO's purchase is also a message, and it is often sent after bad news, when the stock has already fallen and the board wants to show confidence. A CEO's first open-market purchase in years sounds like a stronger signal. It was not: first purchases since 2016 returned +13.2% against +13.3%, while CEOs who had bought before returned +17.8% against +14.3%.

Form 4 does not show a CEO's net worth, but each line shows the shares held after the trade, so we can measure how much a purchase added to what the CEO already held on that line. Split that way, and split again by how easily the stock trades, the pattern is clear. In liquid stocks the return rose with the size of the bet: purchases that added under 5% to the stake returned +12.2% against +17.8% for their index, purchases that more than doubled it returned +44.5% against +20.9%.

In thinly traded stocks the order reversed. Small top-ups returned +18.3% against +13.3%; purchases that more than doubled the stake returned +10.9% against +15.4%, with a typical result of −10.9%. A big bet by the CEO of a small, illiquid company is often a rescue: buying into a financing, or supporting a stock that the market is abandoning for a reason.

Headlines lead with the dollar amount. The returns do not follow it. In liquid stocks, CEO purchases of more than $1M returned +7.5% against +16.3% for their index, worse than purchases of $100k to $1M (+20.2% against +18.2%). Large dollar purchases come mostly from CEOs of large companies who already own a great deal of stock, for whom $1M is a small addition. The share of the stake captures conviction; the dollar figure captures wealth.

Split the big bets by period and the liquid-stock advantage is concentrated in 2016 to 2020. Liquid big bets filed in those years returned +46.9% against +27.4% for their index; in 2021 to 2025, +8.4% against +11.6%. Without 2020 the liquid big bets returned +3.3% against +10.5%. In the later period they still did better than smaller CEO purchases in the same stocks (+6.0%), and far better than thin-stock big bets (−17.2%).

Seven of the eight best liquid big bets were filed in March 2020, when CEOs of energy, leisure and retail companies bought stock that had halved in weeks. Joseph Foran of Matador Resources more than doubled his stake on March 16, 2020; the stock returned +1676.3% over the next twelve months. The lesson is less about CEOs than about timing: a CEO's big bet made into a market-wide panic was the best insider trade of the period.

The worst big bets in liquid stocks were CEOs backing companies that later filed for bankruptcy (Tailored Brands in 2019, Party City in 2018, Loyalty Ventures in 2021) or kept issuing new shares (FuelCell Energy in 2021). Harold Hamm put $34M into Continental Resources in March 2019; the stock fell 77% over the next year. In liquid stocks 10% of big bets lost half their value within twelve months. In thinly traded stocks 22% did.

Every CEO purchase filed from August 1 to September 25, 2026 in a stock trading $10M or more a day that raised the CEO's holding on its Form 4 line by 25% or more. These have no track record yet; the history above says what similar purchases did on average, not what these will do. Stake increases are measured on the line the purchase was reported on: Grab's Anthony Tan, for example, holds much of his stake in Class B shares and through entities, so the direct Class A line he bought into grew far more than his total holding.

The larger-dollar CEO purchases of the same weeks, which added less than a quarter to the CEO's stake, are below. On the decade's evidence these deserve less weight than their size suggests. The largest were Ryan Cohen at GameStop ($47m in two purchases), Lachlan Murdoch at Fox, Dara Khosrowshahi at Uber and Lip-Bu Tan at Intel.

Measure the bet against the stake. A purchase that adds a quarter or more to what the CEO holds is a different event from a $1M top-up by a CEO who owns $300M of stock.

Check the stock trades. The same big bet returned +28.8% in liquid stocks and +9.2% in thin ones. Below $1M a day, treat a CEO's big purchase as a warning to find out what the company needs the support for.

Look at the market around it. The best CEO bets were made when the whole market was being sold. When insiders across the market are buying too, as the buy/sell ratio shows, a CEO's big bet in a liquid stock has had its best record. When several insiders buy together, see cluster buying.