In today’s modern environment, investors have access to a wide array of tools designed to assist them with security analysis and investment decisions. One such tool is the evaluation of insider trading patterns, and some hedge funds do incorporate this kind of information into their security analysis process. While we are solely discussing the legal kind of insider trading, fresh reports suggest that the practice of crooked workers selling their firms’ secrets has been thriving recently.
More worryingly, there has been an increase in so-called “dark web” sites dedicated to white collar crime, making the aforementioned practice easier than ever as more insiders leak confidential information. Why, after years of news of shameful insider trading scandals, are new fraudsters entering the “dark” game of insider trading? A simple answer would be: illegal insider trading is insanely profitable. According to researcher Kenneth R. Ahern, unscrupulous investors reap an average gain of 101% in just nine trading days based on insider information related to clinical trials for instance. Let’s forget about the trades made by unscrupulous people who attempt to exploit and benefit from non-public information and focus on legitimate transactions made by corporate insiders instead. The following article discusses a set of legitimate insider transactions reported with the SEC on Wednesday.
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Insiders at Battered Sporting Goods and Guns ‘n’ Ammo Firm Purchase Shares
To start with, let’s analyze the cluster of insider buying observed at Vista Outdoor Inc. (NYSE:VSTO), where three corporate insiders purchased shares at the beginning of the week. Chairman and CEO Mark W. DeYoung bought 20,000 shares on Monday at prices varying from $20.77 to $20.81 per share, a purchase that lifted his ownership stake to 408,213 shares. A total of 4,500 shares were snapped by Robert J. Keller, President of the Shooting Sports segment, on Monday at $21.50 apiece. Mr. Keller currently owns an aggregate of 7,458 shares after the purchase. Board member Robert M. Tarola purchased 5,000 shares on Tuesday for $20.79 each, boosting his overall holding to 14,335 shares.
The shares of the designer, manufacturer and marketer of outdoor sports and recreation products have plunged by 44% thus far in 2017. On January 12, Vista Outdoor Inc. (NYSE:VSTO)’s shares fell by over 21% after revealing expectations of a material asset impairment charge (i.e. around $400-to-$450 million) at its hunting and shooting accessories reporting unit in the third quarter of the 2017 fiscal year. The sporting goods and guns ‘n’ ammo firm pointed out that an acceleration in the softening of the retail environment and acceleration on its own promotional activity caused both revenue and gross margin declines. Vista Outdoor also recently released a disappointing quarterly report, which revealed a 5% decline in organic sales and a massive decline in gross profit margin. D.E. Shaw & Co. L.P., founded by David E. Shaw, reported ownership of 1.05 million shares of Vista Outdoor Inc. (NYSE:VSTO) in its latest 13F filing.
The second page of the insider trading article discusses fresh insider buying observed at two other companies.