The Insider's Dossier by Packer Andrew;

Author:Packer, Andrew; [Packer, Andrew]
Language: eng
Format: epub
Tags: BUS036000 Business Economics/Investments Securities/General, BUS010000 BUSINESS ECONOMICS / Business Law, BUS008000 BUSINESS ECONOMICS / Business Ethics
ISBN: 4563584
Publisher: Humanix Books
Published: 2014-04-22T00:00:00+00:00

Conclusion: Start at the Top of the Hierarchy and Work Your Way Down

The good news is that, despite all the different insider groups, insiders still collectively beat the market over time. But it’s still important to recognize that not all insiders are created equal. Money managers are fundamentally outsiders, even when they have a 10 percent stake in the company.

Once they take a seat on the board of directors, they move up to a higher spot on the information hierarchy and as such get better returns. C-level executives have the best track record of insider trades, with financially-minded folks doing best.

When multiple insiders are buying around the same time (a cluster), the highest-level subgroup is where you’re likely to get returns. So if a cluster of money managers are buying in, don’t expect big things. If a few board of director members are buying, you should do better than the average insider trade. And if C-level executives are buying alongside a board member or major money manager, you should be golden.

At the end of the day, the best way to reduce your risk when investing alongside insiders is to look for direct buys from CEOs and CFOs and work down from there.

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