Massive Cluster of Insider Selling at Semiconductor-Equipment Maker After Call-Off of Buyout Deal, Plus Insider Trading at AT&T, Delta, More

One could formulate two major claims based on the massive pile of research on insider trading conducted over the years. First, corporate insiders such as Board members and executives earn abnormal returns when buying or selling shares of their companies. Second, outsiders can also earn abnormal returns by mimicking the insider transactions reported with the Securities and Exchange Commission.

The existence of the so-called insider trading anomaly is inconsistent with the strong form of the efficient market model, which claims that all information, both public and private, is fully reflected in a company’s stock price. Nonetheless, hardly anyone considers profitable insider trading as a surprising phenomenon, mainly because of the widespread belief that corporate insiders have monopolistic access to information. Numerous insiders have been trading profitably over the decades within the restrictions placed on them by regulators. And considering that the market efficient hypotheses apparently do not apply in real life, why not try to capitalize on this abnormality? For that reason, the following article will lay out a list of notable insider transactions reported with the SEC this 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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Board Member at AT&T Buys New Stake After Mega-Deal Announcement

One new member of AT&T Inc. (NYSE:T)’s Board initiated a stake in the company earlier this week. Geoffrey Yang, who joined the company’s Board of Directors in late June of 2016, snapped up a new stake of 27,129 shares on Tuesday at prices that ranged from $36.89 to $36.92 per share.

Just recently, AT&T Inc. (NYSE:T) agreed to acquire Time Warner Inc. (NYSE:TWX) in a stock-and-cash transaction that values the target’s stock at $107.50 per share. As communicated in a joint statement, the proposed $85.4 billion mega-deal “combines Time Warner’s vast library of content and ability to create new premium content that connects with audiences around the world, with AT&T’s extensive customer relationships, world’s largest pay TV subscriber base and leading scale in TV, mobile and broadband distribution.” Nonetheless, investors seem to be somewhat skeptical that regulators will approve the transaction, as reflected by Time Warner’s current share price of below $85 a share. AT&T’s shares are 6% in the green thus far in 2016. Ken Fisher’s Fisher Asset Management upped its position in AT&T Inc. (NYSE:T) by 11% during the third quarter to around 55,000 shares.

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On the next two pages of this article well dive into more insider trading activity reported with the SEC on Thursday.