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TWEEDY, BROWNE COMPANY L.P.
What Has Worked in Investing
(continued from preceding
page)
The Impact of Insider Accumulation
Investment returns associated with purchases of shares by corporate insiders (officers, directors or very large shareholders) have been examined in several studies by academicians. All of the studies assume that investments were made in the shares of companies in which (i) more than one insider had purchased a company's shares, and (ii) the number of insider purchases had significantly exceeded the number of insider sales during the same period. The studies also assumed that investments were made in the stocks that insiders had purchased shortly after it was public information that the insider transactions had occurred. The studies which are reffered to in Table 17 are:
(1) Donald T. Rogoff, "the Forecasting Properties of Insider Transactions", Diss., Michigan State University, 1964;
(2) Gary S. Glass, "Extensive Insider Accumulation as an Indicator of Near Term Stock Price Performance", Diss., Ohio State University, 1966;
(3) Charles W. Devere, Jr., "Relationship Between Insider Trading and Future Performance of NYSE Common Stocks 1960 - 1965", Diss., Portland State College, 1968;
(4) Jeffery F. Jaffe, "Special Information and Insider Trading," Journal of Business, July 1974; and
(5) Martin E. Zweig, "Canny Insiders: Their Transactions Give a Clue to Market Performance," Barron's, July 21, 1976.
Table 26 shows the investment returns on the stocks od companies purchased shortly after insiders' purchases.
Table 26:
Investment Returns on Stocks Purchased after Insiders' Purchases
Annualized Investment Return
|
Author |
Period |
Stocks |
Index |
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14 | 15 | 16 | 17 | 18 | 19 | 20 | 21 | 22 | 23 | 24 | 25 | 26 | 27
28 | 29 | 30 | 31 | 32 | 33 | 34 | 35 | 36 | 37 | 38 | 39 | 40 | 41 | 42
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