Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Scripps Networks Interactive Inc. (SNI) and Reliance Steel & Aluminum Co (RS) Witness Some Insider Selling; Other Noteworthy Insider Transactions

Although little research investigates asset managers’ use of insider trading data in their decision processes, there is good reason to believe that at least a small portion of the asset management industry uses this data. After all, a number of renowned investors and researchers have been saying that the use of insider trading can complement one’s investment strategy.

As a general rule, hedge fund firms are extremely secretive and don’t usually reveal how they go about picking their investments and analyzing those investments, but there is a handful of well-known money managers who claim they make use of insider trading data. For instance, successful hedge fund manager Joel Greenblatt, the founder of Gotham Capital, has previously revealed that he takes into account insider trading data. He also suggested that the so-called insider trading anomaly is more prevalent in small and somewhat distressed companies, with the source of abnormal returns from insider trading being related to information asymmetry and insiders having information advantage. The Insider Monkey team processed the Form 4 filings submitted with the SEC on Thursday and pinpointed five companies with noteworthy insider transactions recently.

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).

insider trading

The Daughter of Single-Family Property REIT’s Founder Purchases Shares

Let’s begin our discussion of noteworthy insider trading by analyzing the recent insider buying observed at American Homes 4 Rent (NYSE:AMH). Board member Tamara Hughes Gustavson, the daughter of the founder of American Homes 4 Rent, purchased 76,985 Class A shares on Wednesday and 3,696 shares on Thursday at prices varying from $20.47 to $20.60 per share. Ms. Gustavson, the daughter of B. Wayne Hughes, currently holds an ownership stake of 12.98 million shares following the recent purchases.

The publicly-traded REIT focusing on single-family rental homes has seen its market capitalization rise by 23% since the beginning of the year. In mid-October, analysts at JMP Securities started coverage on American Homes 4 Rent (NYSE:AMH) with a ‘Market Outperform’ rating and a price target of $25, citing “outsized” expected rent growth over the next two to three years. As the REIT operates the largest public single-family rental portfolio in the United States, American Homes 4 Rent will benefit strongly from a continued increase in rental rates for single-family homes that has been driven by significant occupancy improvement. Jason Karp’s Tourbillon Capital Partners cut its holding in American Homes 4 Rent (NYSE:AMH) by 21% during the third quarter to 7.82 million shares.

Follow American Homes 4 Rent (NYSE:AMH)
Trade (NYSE:AMH) Now!

The next two pages of this insider trading articles will lay out more insider transactions reported with the U.S. stock market regulator on Thursday.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.