When a CEO buys shares, you should too

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If a CEO invests shares in his or her own company, take note: It might be a good time for you to buy shares as well, according to CNBC.

SEC filings posted on openinsider.com show that since 2003, there have been more than 200 instances of CEOs purchasing a minimum of $1 million in their organization's stock. All of the share prices had a value of more than $5, and all the CEOs increased their ownership between 5 and 50 percent.

According to the filings, on average, stock produced a 3.5 percent jump within one week of a CEO purchasing additional shares. Within six months of a CEO purchasing more shares, stock jumped 5.6 percent.

The same situation applies to smaller purchases, too. Since 2003, there were more than 800 instances of CEOs buying $250,000 or more in stock. On average, within one week of the purchase, stock jumped 2.1 percent. Within six months, the stock jumped 4.9 percent, according to the SEC filings.

For a practical example, look no further than JPMorgan Chase CEO Jamie Dimon. In February, he bought $26 million in JPMorgan shares. Since his purchase, he's seen a 20 percent return.

"[CEOs] probably know more about their company's future than the rest of us," the CNBC report reads. "They also could be buying when the stock is otherwise undervalued, and waiting for it to go up."

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