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Insider Selling at Ford Motor Company (F), Plus Insider Buying at Four Other Companies

Insider trading can be either legal or illegal. The illegal kind of insider trading occurs when corporate insiders or other individuals buy or sell securities based on “inside” information that is not available to the general public. It is quite evident why the U.S. Securities and Exchange Commission is fighting heavy battles to put those trading on “inside” information in prison. At the end of the day, illegal insider trading puts the average investor at a disadvantage, simultaneously reducing both public trust and confidence in financial markets. In other words, insider trading deters regular investors from entering the market. So why doesn’t the SEC ban all corporate insiders from buying securities (insiders should be allowed to sell their exercised stock options and stock awards)?

Chief executive officers and other top-tier executives posses material “inside” information much of the time, so their insider purchases could always be classified as illegal. Some do not consider that insider trading on non-public information is wrong and should be punished. After all, it could be argued that insider trading is valuable because it increases the available information about a company, which in turn makes markets efficient. Hence, one possible answer to the question stated above might relate to market efficiency. Leaving this discussion aside, let’s have a look at a set of notable insider transactions reported with the SEC on Thursday.

At Insider Monkey, we track around 750 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see more details).

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CEO of Medley Capital Purchases Two Sizeable Blocks of Shares

The man in charge of Medley Capital Corp (NYSE:MCC) filed Thursday to disclose the purchase of company stock. Brook Taube, the Chief Executive Officer and Chairman of the Board of Directors of Medley Capital, reported purchasing 35,500 shares on Tuesday and 79,600 shares on Thursday at prices that ranged from $7.57 to $7.60 per share. The shares are held by a limited liability company controlled by Medley LLC that currently owns 1.31 million shares of Medley Capital. Brook Taube and his twin brother Seth Taube control Medley LLC.

The shares of the closed-end management investment company, whose business operations involve lending to privately-held middle market companies, are up a little less than 1% since the start of the year. In early August, Medley Capital Corp (NYSE:MCC)’s Board of Directors reduced the quarterly dividend to $0.22 from $0.30, after the company’s net investment income for the June quarter fell to $10.96 million from $17.24 million reported for the same period of the prior year. Despite the massive dividend cut, the $0.22-per-share dividend yields 11.61% annually. Nathaniel August’s Mangrove Partners reported ownership of 379,264 shares of Medley Capital Corp (NYSE:MCC) in its 13F filing for the second quarter.

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The next two pages of this insider trading article discuss another set of insider transactions reported with the SEC on Thursday.

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