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Trading on the basis of suspected insider trading

Discussion in 'Trading Strategies/Systems' started by greggles, Jan 3, 2018.

  1. greggles

    greggles I'll be back!

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    Sometimes I notice unusual volume and price increases/decreases on small caps that do not appear to be associated with any news on that particular day. However, in many instances price sensitive information is subsequently released within a few days and the price movement usually mirrors the price movement prior to the announcement.

    Has anyone ever taken positions and traded on the basis of this kind of activity? If so, how did it work out for you?
     
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  2. PZ99

    PZ99 ( ͡° ͜ʖ ͡°)

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    CXO is a pretty good leaky boat for that kind of risky play.

    It frequently goes up and down with the only indication being buy/sell volume.

    Worked a few times for me when buying on the downtrend.

    EUR is heaps of fun at the moment :)
     
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  3. greggles

    greggles I'll be back!

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    I noticed ACL and AEB today. Will be interesting to see what happens with both of them.
     
  4. tech/a

    tech/a No Ordinary Duck

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    Yes I’ve seen it happen so often it can’t be coincidence.
    If I see a good move and an early breakout without a reason
    I’m not going to stick around to find out.

    Earlier the better.
     
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  5. greggles

    greggles I'll be back!

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    ACB up from 3.6c to 8.4c over the last couple of weeks with no release of any price sensitive announcements during that time. Went into a trading halt today with an announcement to be released on 23 March following a speeding ticket from the ASX.

    Hmmm....

    screenshot-shareinvesting.anz.com-2018-03-21-20-21-49.png
     
  6. Wysiwyg

    Wysiwyg Everyone wants money

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    Yeah it's not like coal and uranium are hot at the moment. Be interesting to see the announcement content. :speechless:
     
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  7. greggles

    greggles I'll be back!

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    Almost 11 million shares traded in Empire Energy Group (EEG) today before the company went into PRE_NR status, driving the price up from 1.9c to a high of 3.9c.

    Co-incidence? :roflmao:

    Will be interesting to see what the announcement is all about.
     
  8. greggles

    greggles I'll be back!

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    Well, what a surprise. :rolleyes:

    Released at 2:45pm, more than three hours after EEG was placed into PRE_NR status. Company management must have seen the frenzied buying and decided to request the trading halt early.

    Please note I'm not accusing anyone of anything here. This was a government decision, so any leaks could have come from anywhere. But very clearly, this information leaked and insiders took advantage.
     
  9. Wysiwyg

    Wysiwyg Everyone wants money

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    The earliest news release for that information I could find on the internet was at 10 a.m. this morning but I am sure the AFR subscriber edition would have been released well before that. Pays to be in the loop.
    AFR website edition
    Apr 17 2018 at 9:52 AM
     
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  10. greggles

    greggles I'll be back!

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    You're dead right. I had this one wrong. I just checked too and 10am seems to be when the news started hitting websites, so the frenzied buying was just by punters who knew what stocks benefited from this particular decision (and those they told).

    I bet there are traders out there who focus solely on government policy and legislation. If you keep track of what company is affected by what laws and regulations and you have a really good news feed, it must be possible to do really well out of just being quicker than the hordes who come piling in after people start saying, "Hey, this decision is really going to affect XYZ Limited" where others can hear them.
     
  11. greggles

    greggles I'll be back!

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    A pretty clear case of insider trading with CML in my opinion starting on 10 May.

    There were no announcements following the release of the company's Quarterly Report on 29 April. Then suddenly on 10 May the share price and volume started to increase. The ASX sent the company a Price Query to which the company replied that they had no explanation for the unusual trading in the company's securities.

    Yesterday the share price spiked again, accompanied by a substantial increase in volume.

    Then today, the company announced that the VTEM Max survey completed over the Lorraine and Alotta-Delphi-Zullo (ADZ) Project areas has outlined potential for several significant massive sulphide conductors (anomalies), supporting the Company's view that there is the potential for a significant nickel discovery within the Belleterre Angliers Greenstone Belt.

    Today's announcement was accompanied by a massive increase in volume and another increase in the CML share price.

    So who was buying on 10, 13, 14 and 15 May? Based on the facts as set out above it is fairly clear to me that someone with knowledge of today's announcement was buying before it was released to the market. I have no idea who that might be, but it seems pretty clear on the evidence.

    big.chart-CML.gif
     
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  12. Smurf1976

    Smurf1976

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    I've heard a US-based commentator saying that one of the bigger changes with professional funds managers in the US in recent years is that most of then now employ full time professional political analysts and their views are an input to the investment decision making process along with economics and so on.

    The job of such people isn't to analyse the impact of announced policies on various companies, that's what the financial people do, but to predict where the politics itself is going before any actual announcement and what the likely policy implications are.
     
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  13. Triple B

    Triple B

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    In answer to your original question at the top of thread.
    I have watched similar things happen .
    I have screened for high vol in stocks under $1.00 in previous few days .
    Some interesting scenarios. I then pick a few and go looking for the news . Read a bit and look through past news too. sometimes a decision on a contract is pending , or legal issues waiting to be resolved, etc. the buying starts sometimes a week before the official news is released.
    They cant hide their vol on those low vol stocks. Then the news is released officially and they have a supply imbalance and stock on hand to sell for some quick profit skimming.
    You could easily devise a strategy if you like detective work. an issue may be liquidity , so could be good for smaller traders looking for those %100+ trades, .

    Once my fx trading is sorted I may return to this as I was only interested in the detective work at the time and watching the action on a few.
     
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  14. Triple B

    Triple B

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    Just read the above post about CML. this is exactly what I screen for . High relative vol between 1c and 1.00
    go look at th top 20 results on the charts.then. ASX announcments. Read back through to news. are there drilling reports due soon? Contracts due for renewal etc. The high vol can be leaked info buying up. sometimes it is a substantial holder ending a campaign. Interesting to note The price RISING on a day when a substantial holder dumps the final load!(NIC)
    Very interesting what you can see ,and you can spend hours snooping around.
    Also look at the substantial holding notices. Blackrock bought 13% nic in Aug last year. in fact a whole lump was bought then. supply imbalance then up she goes.
     
    Last edited: May 18, 2019
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  15. PZ99

    PZ99 ( ͡° ͜ʖ ͡°)

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    The ANU looked at 50,000 directors' trades on the ASX from 2005 to 2015 and concluded insider trading is "rife".
    ------------------------
    In a statement, an ASIC spokesperson said "ASIC actively monitors trading for misconduct, including market manipulation and insider trading."

    "Based on a brief look at the research by Dr Katselas, his view appears to be based on a very different concept of what constitutes 'inside information' and 'insider trading' than applies in any comparable market anywhere," the statement said.

    For his part, Mr Padley accepts the findings of the study but says it is impractical to ban directors from trading on inside information.

    "In which case you'd have to ban all trading by directors which would be just ridiculous," he said.

    "I think more the issue here is that the stock market has become very nasty in the short term, very non-value orientated, very momentum and news-driven, and if directors want to take advantage of that, and tell us that they are doing so, then I think that's a great piece of information.

    "And rather than punish them for it, I would say we probably ought to just respect it."

    https://www.abc.net.au/news/2019-09...ng-asx-company-directors-study-finds/11537080
     
  16. SirRumpole

    SirRumpole

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    BS.

    Company directors are there to look after shareholders not themselves.

    If I was a major shareholder in a company and I found that directors were making a packet when other shareholders couldn't, I would have them sacked.
     
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