The extensive literature on insider trading has gone in two different directions, separating insider trading activity into illegal and legal trading. The main distinction is that illegal insider trading remains hidden from the investment community and regulators by relying on various schemes such as nominee sales to mask the fact that insiders are trading. Meanwhile, the legal kind of insider trading requires the disclosure of insider transactions and this disclosure process has been subject to a number of studies aimed at estimating whether insiders earn abnormal returns from their trading, most of which conclude that corporate insiders do indeed generate attractive returns when trading their companies’ shares.
As a general rule, insiders possess information that may not be available to the market as a whole just yet. Therefore, trading on this kind of information provides insiders the opportunity to earn abnormal returns. Numerous studies conclude that Board members and executives are better informed about their companies’ prospects and therefore trade profitably based on this information advantage, purchasing shares in advance of share price increases and selling prior to share price drops. With that in mind, let’s have a look at a fresh list of noteworthy insider trading reported with the SEC on Monday.
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CEO of Large Regional Theme Park Operator Reports Large Purchase of Shares
The man at the helm of Six Flags Entertainment Corp (NYSE:SIX) filed Monday to disclose the purchase of a sizable block of shares. John M. Duffey, Chief Executive Officer and President, reported the purchase of 25,000 shares on Thursday at prices varying from $59.87 to $59.95 per share. The shares are held by Mr. Duffey’s wife as trustee of a family trust that owns 121,000 shares. The CEO also holds a direct ownership stake of 981,464 shares.
The largest regional theme park operator in the world based on the number of parks operated has seen the value of its shares advance by 9% since the beginning of the year. Six Flags Entertainment Corp (NYSE:SIX) operates 18 regional theme and water parks, 16 of which are located in the United States, with one being in Mexico City, and the other being in Montreal. The company has begun talks with the Saudi government to build theme parks as part of Saudi Arabia’s current efforts to diversify its economy away from petroleum and expand its entertainment sector. Six Flags’ expansion into the kingdom will likely include three parks, with the first one anticipated to open in 2020 or 2021. Ken Griffin’s Citadel Advisors added a 689,750-share stake in Six Flags Entertainment Corp (NYSE:SIX) to its pool of holdings during the third quarter.
Let’s head to the next two pages of this insider trading article, where we discuss the fresh insider trading at four other companies.