I'll give credit where credit is due: TheWall Street Journal has genius editors.

Sure, the reporters aren't half bad either. But the editors do a bang-up job of captioning their paper's sections with attention-getting titles. Take my favorite Journal feature, the provocatively titled "Inside Track." How can you not read a column offering the siren call of inside market information?

Of course, that's not what "Inside Track" really covers. (Obviously, the SEC might frown upon that.) Instead, every week it picks a company that's giving off interesting signals in the form of insider buys and sells -- clues, perhaps, to the company's future. Come to think of it, that's pretty darn close to inside information after all. And it's legal to boot!

Did you have a point, or are you just selling Journal subscriptions?
Fair question. Yes, I'm going somewhere with this, and no, I'm not on the take. (I'm actually about to cancel my own Journal subscription to escape the 33% price hike they're trying to pawn off on subscribers.)

In Wednesday's edition, "Inside Track" reported unusual buying activity at Canadian filmmaker Lions Gate Entertainment (NYSE:LGF). Over the month of August, several directors, the company CEO, president, and one vice president spent a total of $819,000 to purchase 86,000 shares of the company on the open market. Another director spent $144,000 more to exercise stock options (and amazingly, didn't immediately cash them in). All of which the Journal interpreted as "widespread optimism" at Lions Gate. That sentiment was enthusiastically echoed by the company's PR representative, who said the buying spree demonstrated senior management's faith in the company's long-term prospects.

So this is a sure thing, right?
Not so fast. Last month, in "Insiders Aren't Omniscient," I examined a pattern of "insider" buying by two major investors in Virginia software company ePlus (NASDAQ:PLUS). For some time prior to the company's August earnings release, investors Steven and Eric Hovde had been adding significant piles of stock to their already hefty collective 14% stake in the company. Now, conventional wisdom would have you think that such actions represent "people in the know" buying just before good news gets released.

Conventional wisdom isn't always right, though -- and that was the case at ePlus. When the company's quarterly earnings were eventually released on Aug. 15, lo and behold, the company suffered a 40% decline in earnings. Oops. Which just goes to show: Follow the leader may be fun and all, but you still need to keep an eye on where you're being led. And it wouldn't hurt to ask the leader how long he or she expects the trip to take, while you're at it.

Hello, kitty
Before we get too excited over the apparent buying frenzy at Lions Gate, it may be worth checking this feline for fleas.

A quick look at the company's insider transactions page on Yahoo!'s Finance site confirms the Journal's facts. But it also tells you a few things the Journal left out. For instance, while many executives were buying Lions Gate stock, one officer was quietly cashing out -- exercising 25,000 stock options at a bargain $2.55 a pop, and selling them all off for a 277% profit. In addition, the VP's purchase was a mere thousand-share lot. As we've seen at other companies, such relatively small insider purchases don't necessarily indicate a bright future. (Xybernaut, for example, went bankrupt soon after a series of such buys.) Sometimes they only indicate an exec's desire to paint a bright picture of that future.

Moreover, August's executive shopping spree has been the exception at Lions Gate. Over the past six months, insiders have actually been net sellers, divesting a net 9.1% of their holdings in the company.

A thorn in Lions paw
Why might Lions Gate executives sell more than they've bought this year? Well, sometimes you have to get while the getting is good. Lions Gate's movies have proven exceedingly good for the company's stock price in recent months. In fact, since mid-2004, Lions Gate has broken a string of cash-flow negative quarters, generating a total of $122.6 million in free cash flow over the past 15 months.

Prior to that, however, this lion was limping. Over the 15 months leading up to mid-2004, Lions Gate experienced net cash outflows of $106.8 million. It would seem that Lions Gate is a "feast or famine" business.

Halitosis checkup
Whether you, as an investor, ultimately decide to stick your head in this lion's maw is a personal choice, of course. Perhaps you're convinced that the executives wouldn't put their own money on the line if they didn't expect great things. Perhaps you, too, believe that the company has turned a corner. After all, in addition to its recent film successes -- Fahrenheit 9/11 and Saw among them -- Lions Gate's television subsidiary has also been going gangbusters. It's produced Missing for Disney (NYSE:DIS) subsidiary Lifetime and The Dead Zone for GE's (NYSE:GE) USA Network, and it's enjoying rave reviews for Weeds, now in its first season on Viacom's (NYSE:VIA) Showtime.

If Lions Gate can keep this up, investors both outside and inside may soon feel like they're rolling in lion-sized equity catnip.

Fool contributor Rich Smith does not own shares of any company mentioned in this article. The Motley Fool is investors writing for investors.