Another Insider Buy at Crown Castle Is a Good Sign

Over the past couple of months, we have seen a steady amount of insider buying activity at Crown Castle International Corp. (CCI) .

Back in December in our Alert here, we noted a roughly $330,000 purchase by Chairman Martin Landis. Then in early February in our Weekly Roundup here, we mentioned Kevin Stephens, who serves on the Board, purchased 2,000 shares at an average price per share of $164.1548 for a total value of about $328,000. 

This is how we generally approach insider activity, from our experience:

Insiders can sell shares for several different reasons. Of course, the most logical explanation for a sale is that they think the stock price has gotten ahead of the company's fundamentals and is overvalued. But in actuality, the fundamentals may not be the full story. An insider could sell shares because they need the liquidity to pay taxes. Or maybe they are about to make a big purchase on a home and need the cash. Simply put, insider selling is important to track but the exact motive can be unclear. 

Insider buying is a much more direct story. People invest their hard-earned money in a stock for one reason and one reason only. To make money.

In a positive signal for the long-term prospects of Crown Castle, we spotted yet another insider purchase of the stock. This time the buy comes from Board director Matthew Thornton III, who purchased 1,500 shares at an average price of $163.032 for a total value of approximately $244,548 on Feb. 9. 

Insiders tend to be long-term thinkers and not short-term traders, so it still may take time for the market to gain an appreciation for the company's fundamentals. However, the fact that insiders continue to buy shares of CCI leaves us even more convinced that sentiment has gotten too negative here.

Action Alerts PLUS, which Cramer manages as a charitable trust, is long CCI.