Top insider trades (Tue, Jan 20)

Connor’s Commentary

There were 144 new insider trades filed, but not many interesting ones today. There was no email yesterday because the markets were closed.

No new insider trades were flagged as High Signal today. 

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• The Chief Scientific Officer at Immuneering (IMRX) joins two other insiders in buying the dip, but it’s just a small $10k purchase

• 6 insiders at Delta Airlines (DAL) sold $23M of the stock

• A director and the CEO at Applied Digital (APLD) sold $7M of the stock after its 300%+ return in the last year

• Monarch Casino & Resort (MCRI) board member Yvette Landau resigned and sold all of their stock

• COO and CAO at Five Below (FIVE) sell $3.14M of the stock after its 100%+ returns in the last year

• and more…

Commentary

I had someone ask if CFOs and General Counsels are the highest signal executives for insider purchases. They heard someone mention on a podcast that they like when CFOs and General Counsels buy the stock because they tend to be the most conservative and pessimistic executives.

The answer is: possibly, but I don’t think that it is typically a deciding factor in whether an insider trade is “High Signal” or not.

We looked at this back to 2009 and did find that GCs have the best performance (Presidents have the second best), but my hunch is this is mostly randomness due to relatively low sample sizes. We have ~3000 purchases by Presidents and ~1300 purchases by General Counsels, and the standard deviation for both is wider than that of other executives, who have larger sample sizes.

Jiang & Wintoki (2016) in Insider trading and the legal expertise of corporate executives (link), found the exact opposite (insiders with a legal background actually underperformed).

Overall, the data on insider buying by General Counsels is conflicting.

The CFO outperformance point is pretty well known, but it comes from one study by Wang, Shin & Francis in 2012 (link), which compared CFOs to CEOs while ignoring all other positions.

As you can see in the screenshot above, we also found slight outperformance for CFOs vs. CEOs, but CFOs were still below GCs and Presidents.

Overall, there is enough conflicting data that I'm not convinced the title of the executive matters all that much. Things like previous track record, if they are flipping from buying to selling, if they are buying the dip, size of the purchase relative to current holdings, etc, are more important.

Maybe if you held everything else equal, then you might rank a CFO or GC purchase higher, but there are enough other variables at play that I don't think that will typically be a deciding factor.

The one thing that I do think is true and high signal is that Execs > Directors >>>> 10% Owners. It both makes sense intuitively, and we have a large enough sample size that I think the data is compelling. I mostly ignore purchases by 10% Owners because of this.

keep scrolling. top trades + all of the charts and data below

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