The correct answer is      (E.)  +8.9%

According to one of the most famous studies conducted on insider trading, University of Michigan Professor Nejat Seyhun found that stocks being aggressively bought by insiders tended to outperform the market by a considerable +8.9% over the following 12 months. The study compiled data on over one million insider transactions over a 21-year period.

As you can see, it pays to keep a close eye on insider activity. Some purchases send more powerful signals than others, so investors must consider insider buying within the larger context of who is behind the buying, whether there's a group consensus, the aggressiveness of the purchases, buying patterns, and the size of the company. Of course, these moves won't be widely advertised, but thanks to the Sarbanes-Oxley Act, all of these transactions must be reported to the SEC within two business days. So while interested investors must do a little detective work, the extra effort often is rewarded many times over.

Of course, knowing what to look for is one thing, but being able to synthesize the mountain of available data into something actionable is a different matter entirely. Every day, regulatory databases record as many as 2,000 filings from over 300 different companies.

Fortunately, StreetAuthority's Nathan Slaughter has already done most of the heavy lifting for you in his latest issue of the Half-Priced Stocks newsletter. He's uncovered a number of companies that qualify as attractive insider trading candidates. Not only are these stocks being aggressively purchased, but they are also all trading at compelling discounts to fair value. In fact, all of them have the potential to appreciate at least +27%, and many are well above +50%! To learn the names of these stocks, and to learn more about the Half-Priced Stocks newsletter, please visit this link.