Is Integrated Silicon Solution (Nasdaq: ISSI) 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 (a) it 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 Integrated Silicon's managers measure up against Seyhun's benchmarks over the past year? See for yourself:

Insider Rating Bullish
No buys over the past year but most sales were at prices well above where the stock trades for today.
Business Description Designs memory chips for consumer electronics and mobile communications, among other markets.
Recent Price $7.10
CAPS Stars (Out of 5) ****
Percentage of Shares Owned by Insiders 7.37%
Net Buying (Selling)* Over the Last Year ($604,446)
Last Buyer (% Increase) No insider buying in the prior 12 months.
Last Seller (% Decrease) John Cobb, Chief Financial Officer
1,132 shares at $11.63 apiece on May 13, 2010
(Reduced direct holdings by 12%.)
Competitors Cypress Semiconductor (NYSE: CY), Integrated Device Technology (Nasdaq: IDTI), Micron Technology (NYSE: MU)

Sources: Form 4 Oracle, Capital IQ, and Motley Fool CAPS. Data current as of Nov. 17.
*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: bullish
Last month, shares of Integrated Silicon nosedived after the company reported fourth-quarter results that disappointed Wall Street. Management also gave an uninspiring short-term outlook for the business, citing seasonality.

Should you take management at their word? Most Fools are. "Thanks to the earnings miss, they should open lower. Still banking on an estimated 2011 EPS around $1.50," wrote CAPS investor OrangeCrema last month.

Interestingly, that may be conservative. Capital IQ shows analysts calling for $1.56 in per share earnings for 2011. If they're right, the stock entered the day trading for just 4.6 times next year's projected earnings. Talk about cheap.

And yet the stock may be even cheaper than it sounds. Over the next five years, analysts are calling for 10% annual earnings growth, which means Integrated Silicon is trading for half its long-term growth rate. Today's buyers are benefiting from a deliciously small 0.5 PEG ratio.

Judging by their transactions, insiders have yet to fully embrace how cheap the stock appears to be. No matter. Looking at the selling pattern over the past year -- wherein most executives cashed in at north of $8 per share -- suggests insiders don't yet believe the stock is fully valued at today's lower price. I agree.

What about you? What do you think? Log into Motley Fool CAPS today and tell us how you would rate Integrated Silicon. 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 or use the comments box below. I'll write this column as often as you, our readers, demand.

Cypress Semiconductor is a Motley Fool Rule Breakers recommendation. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Tim Beyers is a member of the Rule Breakers stock-picking team. He didn't own shares in any of the companies mentioned in this article at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. You can also get his insights delivered directly to your RSS reader. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool is also on Twitter as @TheMotleyFool. Its disclosure policy has its eye on you.