Investment Intelligence from Insider Trading
$14.05
Investment Intelligence from Insider Trading deals with investment implications of reported insider trading. The objective of the book is to determine whether outside investors can improve the performance of their stock portfolios by using publicly available information about insider trading. This book can be used as a supplementary textbook in an undergraduate or graduate level finance course or a security analysis course. This book can also be used in a course on personal investing. Investors who personally manage their own stock portfolios should find the book beneficial, and to improve the readability of the book, statistical issues are de-emphasized and often relegated to footnotes.
Introduction:
The investment implications of insider trading such as are covered in this book will be extremely useful to potential stock market investors. This book will:
- document the magnitude and the duration of the stock price movements following insider trading, determinants of insiders’ profits, and the risks associated with imitating insider trading;
- provide an active look at the likely performance of individual firms as well as the overall stock market based on most recent insider-trading patterns; and
- compare and contrast the information content of insider trading with commonly used measures of value such as the P/E and B/M ratios.
This book will help separate fact from fiction regarding insider trading. For instance, a common fiction is that there wasn’t a lot of insider-trading activity in the 1980s and 1990s due to the increased regulatory penalties. Another common fiction is that while insider-trading information was very useful in the 1970s, it has much less predictive power in the 1980s and 1990s. As evidence to support their claim, critics point to the less than spectacular performance of the funds managed on the basis of actual insider trading. We will examine the time series patterns in the level and profitability of insider trading from the 1970s to the 1990s.
Most of the results in this book are based on a universal insider-trading data set that covers the period from 1975 to 1996. Care has been taken to clean the data set from reporting errors.16 While the insider-trading data are compiled from public sources and therefore they are not proprietary, many of the results presented in this book are new and have not been published elsewhere in the literature. This book on the information content of insider trading should be an indispensable guide for your investment decisions.
Contents:
- Insider-trading patterns
- Does insider trading predict future stock returns?
- A stock-picking strategy
- Predicting future market returns
- Crash of October 1987 and insider trading
- Dividend yields and insider trading
- Dividend initiations
- Earnings announcements
- Price-earnings ratio
- Book-to-market ratio
- Insider trading in target firms
- Insider trading in bidder firms
- Momentum and mean reversion
- Implementation and conclusions
Investment Intelligence from Insider Trading By H. Nejat Seyhun pdf
| Author(s) | |
|---|---|
| Format | |
| Pages | 440 |
| Publication Year | 1998 |
10 reviews for Investment Intelligence from Insider Trading
Only logged in customers who have purchased this product may leave a review.
Related products
Connor Sims (verified owner) –
Positives-
The book is veritable bible on insider trading based investment. The author has taken 1974 to 1994 insider trading data and then sliced and diced in variety of ways to see what works and what doesn’t. The book tries to answer the question- Are insider trades profitable? can outside investors profitably imitate insiders given various constraints like reporting delays, costs etc. I would say the author has succeeded in answering these questions satisfactorily in this book based on his extensive research in this domain.
The author has also uncovered various insider trading signals with varying strength. He presents each variant with resultant profits for next 3,6 and 12 months.
The author also explores if one can combine insider trading signal with other predictors like Low price to book, Low P/E, dividend initiated, past price action, M&A etc. He takes each predictor in separate chapter and then analyzes it thoroughly. Looking at his research and findings helps us understand why he is considered one of the foremost authority in the world on Insider trading.
He finally gives guidelines and advice on investing based on this research. Insider trading profits had been discussed since 1950s. Still these profits exist in the market as developed as US stock market. That speaks for itself.
Negatives-
Very very sloppy editing and draft review before publication. Some of the mistakes are glaring.
In the last chapter in recommendations he omits advice on how to incorporate past price action and insider trading. He also doesn’t give us the probability of success (beating market returns) if we combine past price action and insider trading signals.
One of the disadvantage of all that extensive research is one can get bit lost or confused in few areas. The example is Active Vs Passive insider trading. He does not tell us when he uses other predictors like P/B one should use active or passive insider trading signal? Or does it matter in the first place? I would again blame this omissions to the poor editing and draft review before publication. what is disheartening is even after 20 years the author has not bothered to correct these errors. He should have come up with new edition with error correction and new research findings in this area. Because the findings in this book are that important.
Overall verdict-
If you are interested in insider trading signals or incorporate such signal in your investing then this is Must Buy book. Although there are editing issues in this book that does not take away usefulness of the author’s research in this often ignored domain. If the author comes up with the new edition. I will buy it even at the risk of most of the insights may remain the same.
Calvin Wyatt (verified owner) –
This book will teach you everything you need to know about insider trading.This is the best book available on insider trading.This book is worth alot more then it’s cost.
Dylan Washington (verified owner) –
Instead of talking about those dirty illegal insider trading, it is a long term study (from 70’s to 90’s) of legal, SEC filed stock transactions by company executives, accountants (insiders) to answer, from pg 317, “Can a potential stock market investor mimic insiders and make profits? If so, what is the magnitude of the profits? What kinds of risks does a mimicking strategy impose on outside investors? Given the risks, is it still worth it?”
By and large, the author did provide answers to the above. Profit for the mimicking is still available, after report delays, transaction costs and the need to mimic over 50 multiple transaction to lower risk. For a 12 mth holding period, the strategy outperforms the market by 2% for buying but underperforms by 3.3% for selling.
You can tell the conclusion is simple, but the author did use a lot of set up, with lengthly coverage of legal issues, before summing it up in the very last 14th chapter of this 341 content page book. As per title of this review, it is well researched, informative but too academic and long.
p.s. One minor complaint: The author should give more details on parameter setting and provide an optimal (profit maximization) strategy on the mimicking. Perhaps he did, but he didnt show it in the book.
Valerie Cox (verified owner) –
Are you ready to learn from the somewhat mythical, sometimes notorious and often misunderstood inside traders? H. Nejat Seyhun has compressed a gargantuan amount of information – 21 year’s worth of reported insider trades, more than one million transactions – into a manual that debunks and reconfigures the wild world of insider trading. Since inside traders are bound by strict laws, their prowess comes from proximity to the action. As a farmer can predict the next big storm by watching his cattle, sophisticated traders can predict the next market windfall by watching the insiders. This isn’t a late-night page-turner; after all, Seyhun is a noted academic expert. Yet flashier verbal energy might have sacrificed the book’s most valuable quality: precision. This book (the opposite of the Investing for Illiterates-type) takes its readers and itself seriously – If you are serious about your portfolio, we […] recommend that you put yourself through Seyhun’s course. Dedicated investors, policy makers and scholars need this on their reference shelves.
Lena McDonald (verified owner) –
Would that more financial books were written this way. Gets straight to the point, backs up conclusions with the data (and not the other way around), and examines various combinations of factors along with insider trading. Compelling.
Brendan Newman (verified owner) –
reads like one big mish mash journal article. ludicrous. I’ve read a lot on this topic and have an MBA. i might return this book.
Peter Wilkins (verified owner) –
Better than I thought
Royal Hobbs (verified owner) –
Amazing book. Very informational & detailed of insider trading.
Liberty Hudson (verified owner) –
This is a very good and thorough book. Seyhun addresses many different ways in which you can gain information from insider trading. He is incredibly thorough. That brings me to the major problem with the book–Seyhun is quite repetitive. The different chapters deal with different aspects of insider trading (for example, the size of the trades, who is making the trades, how many insiders are trading). Each chapter has the same structure. Much of the prose seems to be re-used across chapters as well. This is best dealt with by skimming over some of the repetitive parts while paying close attention to the graphs and tables. A second thing about the book is that Seyhun uses tests of his hypotheses that non-statisticians can understand. This improves readability but makes the book longer (and more frustrating for statisticians).
Oaklynn Nelson (verified owner) –
This is a terrific book , the author answers questions about Insider trading that I never thought to ask. If you think it is too academic read the summaries of each chapter and you can get the most important points quickly reinforced by he tables and graphs in the particular chapter. A mutual fund was started more than 1 year ago based on insider trades , the point is why should you pay for stock analysis data when information about a security is available on the basis of what insiders are doing.
These are my (minor ) criticisms : the author evaluates data on the basis of 20 year history and emphasizes the usefulness of aggregate insider data but does not give enough suggestions as to where and how to get this information , the author wants to avoid statistics but avoiding statistics at a very basic level ( standard deviation ) makes it more difficult accept the reliability of his conclusions.