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Hatteras Financial Corp Message Board

  • okiedivot okiedivot Apr 20, 2011 8:35 AM Flag

    Timing Purchases via Insiders

    Have the members on this board studied the open market, direct purchases of Hough, Hough, Steele, Gibbs, Boos, Berson and Kawaller to determine if their purchases are optimally timed? I cannot find any discussion on previous threads, so thought I would bring it up. The options exercise dates could also be studied, but I prefer direct purchases as an indicator.

    I used j3sg to view the dates for the board members and officers and they seem predictable - but are they optimal?

    It seems doubtful that legitimate inside trades would be made en masse on random, sub-optimal dates. Thoughts?

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    • Hey Okie,

      It is my understanding that insiders are legally prohibited from trading on material, non public information, which would include pps drivers such as the Dividend Declaration, X-d., SPO's, Earning Release, etc. "Trading windows", wherein insiders are allowed to trade (with the exception of "scheduled" sales, which execute on a schedule-think Bill Gates) are typically set out in corporate policy. However, you may be onto something. We have a general feel for when the ER, DD, and X-d. will transpire. What we don't have a good feel for is the specific timing for SPOs. If we know the "trading window" restriction on insider transactions preceding SPOs, we might be able to "reverse engineer" when an SPO can't happen under insider trading rules. That is, if we see an insider selling or buying shares on the open market, it may be reasonable to assume that an SPO will not happen within the timeframe set out within each corporation's insider trading guidelines. The next step is to correlate the dates of the insider transactions closest in time to the last few SPOs, and determine if there is actionable information.

      BTW, Thanks also for the refresher in IRR, yet another important evaluation metric.


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