Aurora Borealis
4 February 2022 Financial Analysts Journal Volume 79, Issue 1

Is "Not Trading" Informative? Evidence from Corporate Insiders' Portfolios

  1. Luke DeVault
  2. Scott Cederburg, CFA
  3. Kainan Wang
For investors with insider positions, do their trades reveal information about the value of not-traded positions? This study finds that “not sold” stocks outperform “not bought” stocks, suggesting that such data provide value-relevant information.
Read the Complete Article in the Financial Analysts Journal CFA Institute Member Content


Some individuals, e.g., those holding multiple directorships, are insiders at multiple firms. When they execute an insider trade at one firm, they may reveal information about the value of all — both the traded insider position and not-traded insider position(s) — the securities held in their “insider portfolio.” We find that insider “not-sold” stocks out-perform “not-bought” stocks. Implementable trading strategies that buy not-sold stocks following the disclosure of a sale earn alphas up to 4.8% per year after trading costs. The results suggest that even insider sales that are motivated by liquidity and diversification needs can provide value-relevant information about insider holdings.

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