Talk about placing big bets.

Eric Roseman in The Sovereign Society has picked up on a report by Barron’s that four Merrill Lynch (NYSE:MER) executives bought total of $17.7 million worth of shares in the brokerage. They all bought in on July 29 at US$22.50 during Merrill’s latest stock offering.

Is this a signal that Merrill is a buy? Only time will tell, says Eric. But right now, investors need all the help they can get, and following insider trades like this one can often lead to big wins. More from Eric…

I’m not sure John Thain and his buddies are making the right trade. I also can’t tell you if following Merrill’s executives’ advice and buying now will yield a big capital gain.

But I can say that in this very difficult market environment since last August, investors need all the help they can get – including yours truly. And following what the insiders are buying in the United States and overseas can generally yield some fat profits. Let me give you an example.

I’ve recommended several insider stocks since 1992, including one last fall for my  (CTA) service. The stock is an oil exploration company, and it gained over 120% in less than nine months before we closed the position earlier this summer.

What intrigues me about insider buying is the level of conviction for these corporate executives. These guys are making big bets, usually with cash purchases, on the future direction of their company’s stock price. I like that.

It’s similar to hedge fund CEOs plunking most or all of their net worth into the funds they manage. They eat their own cooking. You have to admire that.

Source: These Insiders Just Grabbed $16.7 Million of Merrill’s Stock?