The Insiders Strategy
THE INSIDERS FUND is a long-short equity fund. We invest in companies at or near prices that management has been willing to invest significant amounts of their own money in. After all, who knows a business better than the people running it? The SEC mandates that officers, directors and 10% shareholders file a Form 4 detailing buying and selling in their company’s stock within 48 hours. The SEC makes this info pubic immediately upon receiving it. This is as close to “insider information” that an ordinary investor is likely to see. Our Fund provides complete liquidity with no lock-ups. We only invest in transparent and liquid Level 1 securities. This strategy involves taking long positions in stocks that are expected to increase in value and short positions in stocks that are expected to decrease in value.
Our analysis starts with the precept that no one knows a business as well as the people running it. The General Partner therefore prefers to invest in highly liquid securities at or near prices that insiders have been willing to purchase significant amounts of their own company’s stocks, bonds, or other liquid securities. This currently whittles down the universe of 3600 or so publicly traded companies to between 200-350 companies based on our select criteria.
Our proprietary software continuously tracks this universe of companies, issuing alerts based on buy and sell algorithms as part of its trading strategy. Although insider selling is a poor predictive tool compared to insider buying (people buy for one reason but may sell for many), we analyze patterns that might signal future business challenges. For example, multiple insiders selling at 52-week lows does not portend promising business prospects.
The Fund maximizes returns by constantly evaluating portfolio holdings for daily or even intra-day price movements. The General Partner will often trade the same security multiple times, opportunistically buying and exiting in order to generate superior performance. The Fund views its capital as its inventory, seeking to find that equilibrium between the most efficient inventory turnover and maximum ROI.
The General Partner deploys a 10-point checklist that includes but not limited to discounted cash flow valuation, PEG and PE ratios, analyst opinions as well as significant catalysts; such as adverse or positive litigation outcomes, drug and medical invention approvals or denials, and patent disputes, etc.
As an opportunistic long/short hedge fund, the General Partner may use leverage in Partnership investments. The Fund has no mandate to be invested at all times and may hold large cash balances and/or hedge positions with futures, options, ETFs, and/or derivatives.
PROPRIETARY SOFTWARE
Our proprietary software continuously tracks this universe of companies, issuing alerts based on buy and sell algorithms as part of its trading strategy.
MAXIMIZE RETURNS
The Fund views its capital as its inventory, seeking to find that equilibrium between the most efficient inventory turnover and maximum ROI.
OUR CHECKLIST
The General Partner deploys a 10-point checklist that includes but not limited to discounted cash flow valuation, PEG and PE ratios, analyst opinions as well as significant catalysts.
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