Review
Review
Product Description
From the Publisher
Thanks to Ivan Boesky and his ilk, the term insider trading still carries a whiff of criminality. But the officers, directors and large shareholders of a firm, informed by knowledge of the firm's prospects, routinely buy and sell its stock at favorable times. Such activities are perfectly legal and can be highly profitable. H. Nejat Seyhun explains how outsiders can use readily available information about insider trading to their advantage. Given the costs and risks of an active trading strategy, the key question for most investors is whether such information can help them to outperform a simple passive index fund.
Basing his insights on an enormous data set that captures information on all reported insider trading in all publicly-held firms over the past twenty-one years (over a million transactions!) Seyhun shows how investors can best make use of insider information. He documents the magnitude and duration of the stock price movements following insider trading, determinants of insiders' profits, and the risks associated with imitating insider trading. He looks at the likely performance of individual firms and of the overall stock market, and compares the value of what one can learn from insider trading with commonly used measures of value such as price-earnings ratio, book-to-market ratio, and dividend yield. H. Nejat Seyhun is Chair of Finance and Professor of Business Administration at the University of Michigan Business School.
"Seyhun carefully proves that every major tested strategy to beat the market works best when insiders have bought their own company's stock. We have used several of the strategies suggested by Seyhun, and they work! Don't buy this wonderful book. We don't need the competition!" -John D. Spears, Co-Manager, Tweedy, Browne American Value Fund and Tweedy, Browne Global Value Fund, and Co-Author, WHAT HAS WORKED IN INVESTING
Professor Seyhun has written a serious, highly readable, and useful analysis of the informational content available to an outsider wishing to follow in the stock-picking tracks of an insider...[He] has done the academic and investor world a great service." -Wesley G. McCain, Ph.D., CFA, Chairman, Towneley Capital Management, Inc.
"We have long taught our business school students that corporate managers have better information about their compainies' prospects and values than outside investors. But investment strategies based on mechanical responses to insider sales and purchases have routinely failed to beat the market averages. This book explains why and, in so doing, provides a guide that should help investors understand which corporate insiders have access to important information (not all insiders are created equal) and when insider purchases are likely to be reliable signals of future improvement."-Joel Stern, Managing Partner, Stern Stewart and Co.
"Seyhun is one of the leading academic experts on insider trading. His well-written and readable book on this subject is a valuable resource for both investors and researchers." -Andrei Shleifer, Professor of Economics, Harvard University
