Presentation is loading. Please wait.

Presentation is loading. Please wait.

INVESTING WITH MILLIONAIRE INSIDERS Tri Star Equity Research.

Similar presentations


Presentation on theme: "INVESTING WITH MILLIONAIRE INSIDERS Tri Star Equity Research."— Presentation transcript:

1 INVESTING WITH MILLIONAIRE INSIDERS Tri Star Equity Research

2 TRI STAR EQUITY RESEARCH AGENDA Insider Qualifications and Motivations Rules for Insider Buying Methodology and Sample Characteristics Results –Overall –Based on Market Cap –Based on Insider Type –Based on Transaction Size UMI Study Limitations Conclusion & Questions

3 TRI STAR EQUITY RESEARCH Insider Qualifications and Motivations SEC: “in a position to have privileged non-public material information on a publicly listed firm.” - Officer (CEO, CFO, COO, Board Members) - Director (VP) - 10% shareholder Motivation: create shareholder value SELL reasons vs. BUY reasons

4 TRI STAR EQUITY RESEARCH Rules for Insider Buying Insider trades based on material non- public info fraud (violation of fiduciary duty to shareholders) Section 16(b) of the Security Exchange Act of 1934 –Form 4 reported SEC within 2 business days –Illegal to Buy & Sell within 6 months –To sell insider must own security

5 TRI STAR EQUITY RESEARCH Methodology Market: all stocks listed in USA (under SEC) Sample time frame: Oct 1 to Nov 30 2007 Event: $1M + insider buy Data source: Form 4 from j3sg.com (3x day)

6 TRI STAR EQUITY RESEARCH Sample characteristics 204 transactions 4,4 transactions/day

7 TRI STAR EQUITY RESEARCH Risk Adjusted Returns Identifiy historical Betas R – β*Rm = α + ε Projected in 2 time frames: –2 months after report –4 months after report

8 TRI STAR EQUITY RESEARCH Results: Overall 2 months4 months HPR0,7%5,6% Annualized4,1%17,8% STDEV22,3%24,1%

9 TRI STAR EQUITY RESEARCH Results: Insider Type OfficerDirector10% SH 2 mo ER-2,8%1,3%2,2% 2 mo ER (an)-15,8%8,2%14,1% 2 mo STDV20,8%19,6%24,6% 4 mo ER4,1%5,1%7,9% 4 mo ER (an)12,7%16,2%25,5% 4 mo STDV30,3%20,4%24,1% Outperform 2mo39,1%48,1%41,6% Outperform 4mo52,2%55,8%53,9%

10 TRI STAR EQUITY RESEARCH Results: Market Cap SMLMEDLRG 2 mo ER1,96%-1,42%-2,85% 2 mo ER (an)12,37%-8,24%-15,94% 2 mo STDV26,37%12,04%15,52% 4 mo ER5,80%6,49%-2,85% 4 mo ER (an)18,44%20,76%-8,32% 4 mo STDV26,63%19,18%15,52% Outperf. 2mo40,8%46,6%44,4% Outperf. 4mo53,3%55,2%44,4%

11 TRI STAR EQUITY RESEARCH Results: Transaction Size SMLMEDLRG 2 mo ER0,2%2,8%1,1% 2 mo ER (an)1,1%17,8%6,8% 2 mo STDV22,7%24,2%18,3% 4 mo ER5,0%12,6%1,2% 4 mo ER (an)15,7%42,9%3,7% 4 mo STDV24,3%27,4%17,7% Outperform 2mo43,1%40,7%41,7% Outperform 4mo56,2%55,6%37,5%

12 TRI STAR EQUITY RESEARCH UMI Study (2003) Nejat Seyhun, professor of Finance at the University of Michigan –Time frame: 1975 to 1995 –Historic (vs actual) –Sample random transactions –All sizes of transactions

13 TRI STAR EQUITY RESEARCH UMI Study: Results

14 TRI STAR EQUITY RESEARCH UMI Study: Results

15 TRI STAR EQUITY RESEARCH UMI Study: Results

16 TRI STAR EQUITY RESEARCH UMI Study: Results

17 TRI STAR EQUITY RESEARCH Limitations Relative short time frame to complete research = 2 month population Performance time period (2&4 mo) Particular market conditions (bear) Some outstanding firms less than 60 months old

18 TRI STAR EQUITY RESEARCH Conclusion Sample outperforms the market 10% SH > Directors > Officers MED cap > SML cap > LRG cap - However Russ2k > SML cap Transactions: MED > SML > LRG UMI study confirms overall results

19 TRI STAR EQUITY RESEARCH Questions


Download ppt "INVESTING WITH MILLIONAIRE INSIDERS Tri Star Equity Research."

Similar presentations


Ads by Google