Watching insiders is like participating in a weeks-long stakeout. You expect something to happen, but you don't know what. So you settle in, sip your coffee, and wait for clues to solving the big case.

Here, the "case" is direction: Which way is your stock headed? The "clues" come in the form of insider buying and selling. Have a look at Cisco (NASDAQ:CSCO) over the past year.

Insider Rating

Bearish: No buys over the past year and all sales at prices lower than the stock trades for today.

Business Description

The market leader in routers and other types of networking equipment, both for individuals and enterprise.

Recent Price


CAPS Stars (out of 5)


Percent of Shares Owned by Insiders


Net Buying (Selling)^


Last Buyer (% Increase)

None over the prior 12 months.

Last Seller (% Decrease)

Prat Bhatt, VP and corporate controller.
5,019 shares at $22.82 apiece on Sept. 15.
(Sale represented 11% of direct holdings.)


Alcatel-Lucent (NYSE:ALU)
Juniper Networks (NASDAQ:JNPR)

CAPS Members Bullish on CSCO Also Bullish on


CAPS Members Bearish on CSCO Also Bearish on

Microsoft (NASDAQ:MSFT)

Recent Foolish Coverage of CSCO

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Sources: Form 4 Oracle, Capital IQ, and Motley Fool CAPS. Data current as of Oct. 13.
^Open market sales and purchases only.

What we're tracking here, and why
Insider buying data can be confusing. Here, I'm concentrating only on buying and selling conducted in the open market. With most of these transactions, insiders control the timing. Other times they're buying or selling under the purview of a 10b5-1 plan. Either way, personal holdings are being bought and sold.

Those personal holdings matter the most. They're the shares executives hold for investment, rather than compensation. Employee stock options are different; they're compensatory in the purest sense. I've stripped options-related buying and selling from the above calculations.

The Foolish view: bearish
For years, bears have been arguing that Cisco, like Oracle (NASDAQ:ORCL), buys all of its growth. "All" is too strong a word to use when describing the extent to which acquisitions contribute to Cisco's bottom line, but CEO John Chambers still likes to shop.

Earlier today, Cisco bid $2.9 billion for Starent Networks, a maker of mobile infrastructure gear. This is the company's second buy in two weeks. On Oct. 1, Cisco announced a $3 billion deal for Norway's Tandberg, a supplier of video conferencing technology.

But industry insiders such as CAPS investor wishlist3410 say that smart shopping is only part of Cisco's story. "I have been in the Information Technology manufacturing section for 10 years. Their products are built like a tank, very durable and always reliable. Plus, their VoIP technology is just incredible," this CAPS member wrote last week.

Certainly it's true that Cisco is a known and trusted brand in the IT business. And yet executives didn't buy shares when the recession hit their stock hardest; they sold. Corporate controller Prat Bhatt was still selling as of last month. I'd feel more comfortable with the bullish case for Cisco if insiders were buying at current prices.

Do you agree? Disagree? Log into Motley Fool CAPS today and tell us how you would rate Cisco.

And if you want me to take a Foolish peek at the insider action of your favorite stock, email me here or use the comments box below. I'll write this column as often as you, our readers, demand.

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Fool contributor Tim Beyers had stock and options positions in Apple and Google and a stock position in Oracle at the time of publication. Check out his portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. The Fool's disclosure policy has its eye on you.