TheStreet.com has a list of stocks with significant insider buying and/or selling. Included: $TIE, $LEX, $PNC, and $BBY saw insider purchasing while $GOOG, $MCK, $QCOM, $F, and $HPQ saw insiders unloading stock. (TheStreet.com)
List of insider buys from Bloggingstocks includes: $LGF, $MAYS, $PZG, and $GAM. (BloggingStocks)
$OPK continues to see insider buying, as does $UMH, $BPAX, and $FFBC (JS3G)
On a macro level, for the week ending January 14, 2011, no insider buying activity was recorded. Whoa. (zero hedge)
2 stocks with bullish insider buying (Street Authority): This article looks at aggressive insider buying in Lincoln Educational ($LINC) and Dollar General ($DG).
5 stocks insiders are buying in 2011 (Insider Monkey): This post focusing on insider buys at 5 firms: Winmark ($WINA), Trailer Bridge ($TRBR), Cogent Communications ($CCOI), Diamond Foods ($DMND), and EQT Corp ($EQT).
Which stock falls first (Motley Fool): In spite of insider selling, this article takes a balanced look at Wynn Resorts ($WYNN).
Insider buying/trading daily screen (J3SG): Today’s screen included lots of insider buying in Ladenburg Thalmann Financial Services, $LTS.
“To compile the list, we created a universe of 140 stocks that have seen strong gains over the last quarter. Additionally, all of these companies have had positive earnings and sales growth over the last five years. We then narrowed down the list by only focusing on those stocks that have seen insider buying over the last three months.”
This week’s episode of Tradestreaming Radio is up and ready for listen. Let me know what you think and if you have ideas for future shows. You can listen below, find the transcript below or download directly to you iPod/iPhone via iTunes — search for Tradestream or go here.
With the daily news of hedge funds being raided and expert networks being investigated, I wanted to put together a resource sheet for those looking to delve a bit further into the insider trading game.
Decoding Insider Trading (Cohen): This new paper looks at a methodology to isolate insider traders acting on good information from noisy trades. By looking at individual trades — versus looking at all insider activity — investors can mimic better-performing trades, boosting performance of insider trading strategies.
Law and Economics of Insider Trading: A Comprehesive Primer (Bainbridge) 84 pages of insider trading awesomeness. This 2001 paper deals with everything from the origins of current laws prohibiting insider trading to defining an insider to making a case for and against regulating insider trading. For a smaller, more concise paper on insider trading, see Bainbridge’s Insider Trading: An Overview
How Informative are Analyst Recommendations and Insider Trading (Hsieh, Ng, and Wang) Evidence points to insider trading and analyst recommendations giving conflicting signals. This paper documents that and provides theory why this may be the case.
What Insiders Know about Future Earnings and How They Use It: Evidence from Insider Trades (Ke, Huddart, Petroni) Insiders do trade on this stuff up to 2 years before public release.
Do Insider Trades Reflect Superior Knowledge About Future Cash Flow Realizations (Piotroski, Roulstone) Short answer: yes.
Insider Trade Disclosure, Market Efficiency, and Liquidity (Buffa): Policy implications after finding that informational efficiency and liquidity are lower in more transparent markets
Institutional Investors and Insider Trading Profitability (Markarian, Bricker) Insider profits are inversely related to presence of institutional ownership. Hedge funds/mutual funds may provide monitoring effect.
In an incredible twist, the FBI and DOJ have raided the Yahoo Message Boards today as part of an expanding investigation into insider trading. According to most recent reports, the FBI is investigating numerous players in the investment field (including 6 hedge funds) in what pundits are calling Insider Trading Fest(ivus)
Posing as bigdaddywantmoney123 and insiderhoneypot, two detectives have been monitoring suspicious activity for the past 7-11 years on the industry’s most active site to share useless, inane, political opinions.
After serving a warrant to…um…eh…(WTF?? Who’s in charge over there at Yahoo?!), the FBI sent a team of forensic detectives to do their thing on the Yahoo Finance Message Boards on a set of servers located in Sunnyvale, CA.
The smoking guns
$BIDU: On the Baidu ($BIDU) message board, asiantradermakingseriousyuan said that his cousin’s brother’s wife who lives in Beijing knows BIDU’s CEO’s brother’s nanny and she says the company is on fire. Clearly, impactful nonpublic information. Google, here we come!
$AAPL: Over on the media device juggernaut’s boards, user macforlifebaby said that he’s got an in with a janitor who cleans Steve Job’s dentist’s office and reportedly, the Apple Computer CEO had a least three teeth whitenings in the past 3 years. Heady stuff — what you trying to hide, Steve, eh??
$AMZN: This one’s really good. You know the hot Kindle book reader device sold by Amazon.com. Well, supposedly, someone’s posting on the message boards who works at UPS in Seattle and he estimated that he’s picking up more boxes this year than ever before at the retailing giant. God, that’s good info!
$PCLN: This one seems a bit far-fetched but illustrates how individual investors are not playing on a level playing field when it comes to investing. So, you know how you can bid on hotel rooms on Priceline.com? Well the stock is one of the best performers over the past 12 months and IwanttohaveWilliamShatnersbaby says that he (she?) noticed that hotels in New York city are going for less than they were 3 months ago. Short it baby!!
In all seriousness, the FBI is taking these allegations seriously and says its aim is to prevent leakage of potentially tradeable info onto the message boards. The FBI has suggested the Internet to be turned off periodically and power cut to those homes suspected of aiding and abetting these criminals.
Unless you’ve been living in a cave last week (i hear it’s nice there this time of year), you’ve probably seen/heard/felt the aftereffects of the WSJ article U.S. in Vast Insider Trading Probe.
What’s going on
The short of it is:
the U.S. suspects the existence of multiple insider trading rings
the size of the impact of this net would vast eclipse previous insider trading networks
ensnared are consultants, investment bankers, hedge-fund and mutual-fund traders, and analysts
holy mackerel, batman
Interesting for readers of Tradestreaming and my book is the focus on expert networks. As per the WSJ
One focus of the criminal investigation is examining whether nonpublic information was passed along by independent analysts and consultants who work for companies that provide “expert network” services to hedge funds and mutual funds. These companies set up meetings and calls with current and former managers from hundreds of companies for traders seeking an investing edge.
These expert networks are de facto for most large investment funds. As I wrote, expert networks like Gerson Lehrman provide unique research experiences, connecting fund analyst with industry experts for one-off interviews.
Not all bad
Unlike traditional sell-side research that is distributed to many investors and loses its value with greater distribution, expert networks provide extremely valuable interactions. My book includes an interview with a senior GLG executive. Much of our time spent together was spent dissecting the compliance engine the leading network had put together and I believe this was as much for PR purposes as much as it was for legal purposes.
It is clear that expert networks have been cited numerous times in the past few years as potentially being involved in facilitating investors’ access to material nonpublic information. However, we are convinced that the financial markets are better off using “best of breed” expert networks than without them — Integrity Research
Other insider trading rings busted recently (like Galleon) were their own creations. I have to agree with Integrity Research‘s opinion — this wasn’t by chance. If Galleon’s vast web of insider information had existed on GLG’s platform, there would have been a clear audit trail of who was involved and to what level. That didn’t occur — instead, by using individual contacts, Galleon was able to obfuscate its activities for years.
That wouldn’t have happened using a professional expert network and markets are better off by having these. That said, it’s clear why GLG isn’t able to go public and we’re probably looking at increased regulation of these platforms (which would push more investors to skirt their use).
Heavier hand add more carrying costs
What might happen, regardless of the outcome of this particular probe, is
increased scrutiny into the investment research space
some type of oversight/regulation of expert networks
more distrust of Wall Street by people on Main Street
employers continuing to crack down on employee participation in expert networks
formation of ad hoc expert networks (LinkedIn + phone)
prices going up on expert networks because of increased oversight