There are websites devoted to tracking the activity of insiders that try to give investors an edge on opportune times to take or exit positions. Gleaning exactly why an insider is buying or selling can be tricky and sometimes misleading, but for those that have honed their skills over the years to better discern motivating forces, following insider action can often be quite profitable. As noted in a CNN Money article in June, Catalyst Funds' manager
David Millersays that undervalued blue chip stocks tend to perform well after insider buying takes place. Catalyst maintains several portfolios that are centered on heavy insider buying. Investors love seeing the faith of insiders laying out their own cash to buy shares of their company, regardless of exchange. This is evident in Tuesday trading of premium beverage maker Jones Soda Co. (OTCQB: JSDA). Jones stock has languished in recent years, to say the least, losing more than half of its value in the past 52 weeks amid a larger fall that has seen the stock sink from over $1.50per share early in 2011. The company has been working on restructuring, while also trying to increase marketing through campaigns with companies such as Fiat, as we noted last year. Jones, which makes classic flavor sodas and those not-so-classic, such as the limited edition Peanut Butter and Jelly Soda, said that it completed its restructuring process during the second quarter and is now shifting its efforts from simply stabilizing to growth and profitability. Jones increased spending during the quarter on what it called "mission critical" investments, which widened net loss to $429,000, or a penny a share, from $95,000, or nil a share, in the year prior quarter. More spending also sapped margins (from 28.8% of sales to 22.5%), as revenue contracted to $3.9 millionin the quarter from $4.3 millionin the year earlier period. It's not uncommon to see sales decline, margins to tighten and net loss to expand amid restructuring, but investors will be watching more closely now that that the company is supposedly re-aligned. Chief Executive Officer Jennifer Cueis putting her money where her mouth is, announcing today that she has increased her personal stake in Jones Soda. Ms. Cueadded another 1.8 million shares through the cash exercise of vested stock options at 29.04 centseach, resulting in $522,720in cash to the company. Since rejoining the company in June 2012, she has invested a total of $581,000in JSDA and now owns a total of 2,106,360 shares, making her the largest shareholder in the company. "I'm all in," said Ms. Cuein a statement Tuesday. "Our employees, shareholders, distributors and new retail and corporate partners understand my drive to create profitable relationships. Our lineup is now in place. We have a powerful brand with untapped market potential, an updated product line that matches today's consumer preferences, and a stronger force of distributors that are better suited for what we want to accomplish at retail and on fountain," she added. Wall Streetseemed to relish in Cue's investment. Shares roared ahead 24.24% in Tuesday trading to end the day at 41 cents.