Profiting from Legal Insider Trading

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While everyone may argue about winning stock techniques, there is one thing that virtually everyone can agree on; those investors with the best information usually win.

Text of Profiting from Legal Insider Trading

  • Profiting from gLegal Insider Trading

    For free insider trading reports and a free video course further explaining this material visit www InsidersLab commaterial visit www.InsidersLab.com

  • What Insider Trading is and Why It Should Matter to YouWhile everyone may argue about winning

    stock techniques, there is one thing that virtually everyone can agree on; those investors with the best information usually investors with the best information usually win.

  • That said, those with the best information on any given company are the corporate insiders managing staff and making decisions for that company on a day todecisions for that company on a day-to-day basis.

    They are obviously privy to information that the rest of us will never havethat the rest of us will never have.

  • Of course, this gives them an unfair advantage over the average investor when the insiders are buying and selling their own company shares so the SEC has them own company shares so the SEC has them adhere to a strict set of rules. Among other restrictions insiders are limited to other restrictions, insiders are limited to certain trading windows and they must report all of their trades to the SEC in a ptimely fashion.

  • As well soon see, this is all good news for the average investor because these insider trades are all made publicly available. Insiders may not be able to tell you Insiders may not be able to tell you exactly when and how much of their companys stock to buy or sell but their company s stock to buy or sell but their actions speak volumes.We call these trading signals and well be We call these trading signals and we ll be

    covering a few of these in this tutorial. Lets jump right in shall we?

  • Look for Open Market TransactionsMost individuals buy and sell their stocks

    in the open market. They find the bid and asked price for the shares and execute their trades - all in the open market. But insiders have a number of other methods insiders have a number of other methods for acquiring or disposing of stock shares.

  • These methods may include private placement and/or exercise of stock options.

    Often these alternative methods allow i id t b h b l t il i insiders to buy shares below retail prices or without having to pay any commissionscommissions.

  • Therefore, when insiders do decide to buy their companys shares in the open market they have to make the same risk vs. reward calculations individual investors reward calculations individual investors do. They must also figure in the trading costs of paying commissions and buying costs of paying commissions and buying at their stocks asking price. A decision to buy shares on the open market regardless y p gof the risk and with the associated costs is a much stronger trade signal to us.

  • Option-Related Insider TradesWhen an insider does exercise his options

    he sometimes exercises and sells several lots within a time frame. One of the reasons for doing this might be a shortage of cash to exercise all of his options at of cash to exercise all of his options at once.

  • For example, if shares are trading on the open market for $15 and our insider has options to buy 20,000 shares at $10 he has the potential to make $100 000 has the potential to make $100,000 immediately.

    However, to do so would mean paying $200 000 up-front and he may or may not $200,000 up-front and he may or may not have that much available cash.

  • In this case, he may choose to buy 5,000 shares at a time and use the profit to buy more shares. He would keep doing so until all options have been cashed inall options have been cashed in.Many may have viewed this piecemeal

    style of purchasing as a negative indicator style of purchasing as a negative indicator of the stocks future prospects when in fact it wasnt.fact it wasn t.In our next session well be covering the

    differences in interpreting insider p gpurchasing versus insider sales.

  • Insiders Buying vs. Selling SharesWelcome to the third instalment of

    Insiders Lab insider trading tutorials. Today well be discussing the significance of insiders buying stock versus insiders selling their sharesselling their shares.

  • There are many reasons why an insider would sell their shares. They may need cash for a new home or pay for their kids tuition Or they may just want to diversify tuition. Or they may just want to diversify their investments. However, there is only one reason for an insider to buy stockone reason for an insider to buy stock.They think that the price will rise. Makes

    sense right?sense right?

  • On the other hand, a major flag for identifying stocks to avoid and possibly consider selling short, would be insiders selling their shares after the price has selling their shares after the price has dropped substantially.

    This is a strong negative signal.

  • Differences in Holding PercentagesWelcome to the fourth segment of the

    Insiders Trading course by InsidersLab.com. Today well be discussing the importance of looking for big trades and checking for changes in big trades and checking for changes in insiders holding percentages.

  • Obviously the more money insiders are trading the more significant the transaction. When researching a company it is a good idea to start your research it is a good idea to start your research with the larger transaction values first. Most insiders are not chairmen with multi-Most insiders are not chairmen with multimillion-dollar bonuses.

  • The average vice president and chief financial officer at a company may make a comfortable living but a $10,000 trade is still serious money to many of them still serious money to many of them.

    Th t ti l l k ll The transaction value may look small beside all the others you see on a given day but it doesnt mean it isnt significantday but it doesn t mean it isn t significant.

  • Likewise a 5,000 share trade that doubles a vice-presidents shareholder percentage is more significant than a 5,000 share trade made by a chairman with millions of trade made by a chairman with millions of shares. The 5,000 shares may represent a good deal of the vice-presidents net good deal of the vice president s net worth.

  • Hands-On Insider Trades Welcome back to the InsidersLab.com

    Insiders trading training course. Today well be discussing the significance of trading done by hands-on insiders.

  • As a rule, it is more beneficial to focus on transactions by insiders with a hands-on role in the company. Trades by the chairman, president or chief

    executive officer, vice president, chief financial officer or any C Level officer financial officer or any C-Level officer should be given priority. They have the most proprietary knowledge and often most proprietary knowledge and often have more personally at stake in the trades they make.

  • Though directors generally lack day-to-day responsibility their transactions should not be completely ignored. They also have access to information about the companys access to information about the companys financial condition and strategy. Maybe not to the degree as their hands-on not to the degree as their hands on colleagues but definitely more than the average retail investors.gIn our next segment well be covering

    Long-time insiders and looking for direct ownership.

  • Long-Term Insiders and Direct OwnershipWelcome to another segment of the

    InsidersLab.com insider training tutorial series. Today well be covering the importance of following long time insiders importance of following long-time insiders and looking for direct ownership.

  • It is important to know the trading history of an insider when judging the relative significance of any insider trading signals. This rule applies particularly to new This rule applies particularly to new directors and C-Level officers. Insiders with long trading history are more with long trading history are more significant than insiders will short trading history within a company. y p y

  • If you can, try to find out when an insider became an insider and grab hold of an insiders history that has at least a few years of data years of data.

    A th f l ti i t l k f di t Another useful tip is to look for direct ownership. Direct ownership means that the shares are actually registered under the shares are actually registered under the insiders name.

  • Generally speaking, insider trades of direct holdings are more significant than indirect ones. It makes sense that individuals are more likely to practice individuals are more likely to practice more discretion when the results affect their pocketbooks directly their pocketbooks directly.

  • Look for Group TradesHello and welcome to another instalment

    of the InsidersLab.com Insider Trading course. Today well be covering the topic of group trades.

  • It is always more significant to see a group of insiders trading within a short period of time. Insiders are only human and believe it or not they can be and believe it or not - they can be wrong. So any activity indicating where there is a consensus among a few insiders there is a consensus among a few insiders should be considered a strong signal. It is logical to assume that the odds of two, g ,three, four, or more insiders being wrong are much less than the odds with just a i l i idsingle insider.

  • Thats it for this segment. It was a short one but important. By the way, if youre enjoying our information be sure to head on over to InsidersLab com and sign up on over to InsidersLab.com and sign up for a 14 day trial of our services. For less than fiftee