Is CSX (NYSE: CSX) headed higher or lower? That's the question we ask when we evaluate insider buying and selling. We ask because how executives spend their paychecks is often a reflection of what they think of their companies' prospects.

Of course, not all buys are equal. According to two decades worth of research from Dr. H. Nejat Seyhun compiled in his book Investment Intelligence From Insider Trading, buying is most predictive when it (a) comes from the CEO or other top-level executive, and (b) it's performed in bulk. Seyhun found buys of between 10,000 and 100,000 shares to be most informative.

How do CSX's managers measure up against Seyhun's benchmarks over the past year? See for yourself:

Insider Rating Bearish; no buying with one executive selling an increasing number of shares at prices slightly lower than today's.
Business Description One of the country's largest railroads and suppliers of transportation services.
Recent Price $61.67
CAPS Stars (out of 5) ****
Percentage of Shares Owned by Insiders 0.38%
Net Buying (selling)^ ($352,248)
Last Buyer (% increase) No buys over the past 12 months.
Last Seller (% decrease)

David Brown, executive VP and chief operating officer

4,000 shares at $59.76 apiece on Oct. 18

(reduced direct holdings by 9%).
Competitors

Norfolk Southern (NYSE: NSC)

Pacer International (Nasdaq: PACR)

Union Pacific (NYSE: UNP)

Source: Form 4 Oracle, Capital IQ, and Motley Fool CAPS. Data current as of Nov. 27. ^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 out options-related buying and selling from the calculations you see above.

The Foolish view: bearish
In the wake of Berkshire Hathaway's (NYSE: BRK-A) (NYSE: BRK-B) purchase of Burlington Northern, railroads have become more popular among value investors. When it comes to CSX, there's also plenty for growth investors to like.

"CSX is well positioned to benefit from the gradual improvement in the economy in the USA and in Asia: shipping coal for energy, raw materials and finished goods, and even passengers as the government invests in rapid rail transportation," Foolish investor IRVINGP wrote a year ago, when the stock was still trading for $48.20 a share.

He isn't the only fan of the stock. According to Morningstar, the growth-grabbing Fidelity Contrafund (FUND: FCNTX) added 1.35 million shares as of its latest holdings report. The economics and efficiency of railroad transport may have something to do with that.

CSX isn't only a railroad, though rail accounted for 87% of revenue and 93% of operating profit last year. With numbers like that, investors can be forgiven for ignoring the company's small and shrinking intermodal transportation business. What matters is that overall operation is priced reasonably. I think it is.

Shares of CSX trade for just under 16 times expected earnings, a slight premium to the 13.4% annual average Wall Street projects for the next five years. A modest 1.7% dividend adds a welcome kicker.

So why aren't insiders more enthusiastic? I wish I knew. Only one executive has sold over the past year, but at prices generally lower than the stock trades for today. I'm interested in the business, but I'd like to see at least some executive buying before committing to the stock in CAPS or my family's real-money portfolio.

Do you agree? Disagree? Log in to Motley Fool CAPS today and tell us how you would rate CSX. You can also add the stock to your watchlist.

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