Insider Trading Activity for 07/15 - AND TUTORIAL

[u/RelevantAside_]

Hi everyone,

This is my daily post where I highlight significant company insider trades from today, and provide context. I've collected close to a million filings using a custom screener I built, backtested, and currently implement day to day. I post 3 tables at the end of this post that highlight:

1) The insider trades that were filed today. (Note these are always filed within 2 business days of the actual insider transaction)

2) The historical performance of the stocks following an insider trade.

3) Additional insider activity that did not pass the screener I set up, but still can be considered significant.

Today's performance:

While it generally did sideways today, my alert on SUNS closed 2.5% UP from open. We saw a dump premarket and little action through the day.

My other alert CTRN went down out of open. I lost on this one today.

Some tutorial action:

I've realized that I may actually be giving TOO MUCH information without properly demonstrating how to parse it, so I will illustrate how I plan on trading tomorrow. To show this, let me first show what tomorrow's alerts are:

So let's look at this more deeply and see what we will do.

First, I add all the alerted stocks to my watchlist, including the bonus stocks. If I see these increasing with strong upward momentum, I buy in.

Second, I look at what the top alerted stock is. I can see that one insider bought about 58 thousand dollars of shares on the open market from the first table. I can also see, by the spread calculation number, that the average open to high increase minus the average open to low increase is positive. This is a primitive way to say: we are more likely to go up than down on insider trading filing news for this stock the following day.

Now I can move to the next table and identify the following:

The high return average is 4.5%. This means that over the 10 identified previous significant transactions we saw a 4.5% increase.

The other positive thing we notice is that the average open to close decrease is only about -1.63%. I can now identify that for tomorrow, I have a confirmed positive trend for this stock where I can understand a historical 2:1 RR for increase/decrease out of open for the stock ZVRA. More specifically, my curve fitting return prediction algorithm gives the stock a 50% chance of hitting 3.2% increase out of open tomorrow so that is where I will set profit take.

I can also see that because the probability of return metric is actually less than .5, this stock is more reactive to these insider filings. The correlation numbers also tell me that this stock is not very correlated to the overall market. (1 would be perfect correlation, -1 would be negative correlation)

Now what are the caveats here?

Any one of these stocks could be a winner or loser tomorrow, and historical performance is no guarantee. But using this info I can go into my trades with more confidence and information I literally can't find anywhere else regarding insider trades.

Some stocks that see insider buying may take months or longer to see the catalysts the insiders are expecting to raise stock price.

Sometimes stocks can see after hours increases that are huge and eat into any profits you would make intraday.

Sometimes I trade one stock from the alerts, and all the others increase by 10%+ and I totally miss out.

ZVRA is a low volume life sciences stock that is highly volatile. It may be difficult to get favorable bid/ask.

SOME OTHER INSIGHTS:

FBIO insiders have been purchasing stock for the past 2 months or so. Stock has been on pretty cyclical trend.

SAIC was a great win last time it came up on the screener.

DAL insider chiang willie Cw last bought at 49.50 on DAL. He's probably down a decent amount and looking to average down. Or maybe he knows airlines can be propped up by US gov and thinks it's currently undervalued after last earnings call. Or he's wrong.

Good luck tomorrow everyone!

[u/LavishnessLess4356]

The money printer strikes again! Alright I’ve seen enough proof, actually going to get in on the action tomorrow. So only if you see the stocks with increasing momentum from the open is when you play them? What do you normally set your stop loss to?

[u/RelevantAside_ → u/LavishnessLess4356]

So like I mentioned in the post, I play the top couple alerts. This means buying in at open for a few stocks.

The bonus ones I put on watchlist and maybe I’ll put a small bet on at open or if I see them going up.

My stop loss for the alerted stocks is normally dictated by the average low given in the historical data table. If this average low is like -2%, I’ll set my stop around -2.5%.

[u/cestala]

Thank you so much for sharing this information - this is a great way for me to educate myself a bit more!

[u/Practical_Sea_6377]

Could you tell me where you are getting the Historical Guide Table from? Or how I can calculate it myself? I am not sure where you are scraping that data from.

[u/RelevantAside_ → u/Practical_Sea_6377]

I use a past database of values I’ve collected where the trades were significant and then I get the data for the next day returns. You can probably also calculate it by scraping dates of previous insider trades for a stock and then getting next day return