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         Daily Blog - Tiger Software

                            December 26, 2007

                     Insider Selling: British Style
      Is Northern Rock The Tip of The UK Ice Berg ?


     
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                     Insider Selling: British Style
:
                Is Northern Rock The Tip of The UK Ice Berg?

                Heavy Insider Selling Is Shown in These Stocks.
                                            Barclay's Bank
                                           Barratt Dev.
                                           British Land Development
                                           Daily Mail
                                           Experian
                                           Hammerson REIT
                                           Home Retail Group
                                           Intercontinental Hotels
                                           Kingfisher
                                           Royal Bank of Scotland
                                           Wolseley
                                           WPP Group                                           
                                 
                                 
Insider trading can help you make a lot of money.  Use TigerSoft to find stocks like
                       those shown below.  Do what the insiders are doing.  Buy what they're buying and sell
                       short what they're selling.  This is especially true for trading non-US markets, where
                       insider trading is, if possible, even more rampant than in the US.     
  

                             
"Let's Keep This between just Us." (See artcile by David Weidner of Market Watch..)

                                American "insider trading" is illegal according to the SEC.  But it's clearly
                      rampant.   The SEC admits insider trading on Wall Street is rampant.   It seems that
                      the SEC is mostly concerned with policing corporate insiders who sit on the
                      Board of Directors or who own more than 10% of a company's stock. Shares traded
                      in their own companies must generally be promptly reported. although the George Bushes
                      of this world are given special treatment. 

                                Wall Street continues to be an "old boys' network."  Who you know is very important.  
                     Assume you are a hedge fund manager.  The sense I get is that, as long as you show some discretion,
                      restraint and prudence, you will seek insider information and rationalize it that you
                     are doing this to stay competitive.  As long as you don't mention your sources and don't
                     act too wildly on the information, the SEC will not have your trade flagged and you're
                     probably home-free.   
                                The number of insider trading violations they pursue is quite limited.
                      Some glaring cases do pop up from time to time - as when (1) the NY Attorney General
                      (not the SEC initially)  accused brokers of "front-running" mutual buying, when (2) the
                      number of calls traded jumps from 5,000 to 18,000 just before a buy out or when (3)
                      a printer gets wind of a Buy Out or a national financial magazine's stock recommendation. 
                      But mostly the SEC, as presently directed and staffed, does not knock itself out to track
                      down trading that people normally would consider to be trading based on special, insider-
                      based information. There's just too much of it.  Look at all the TigerSoft charts! 
                      
                                 What about Canada?
                                
"A report prepared Measuredmarkets Inc. by a Port Hope, Ont.-based student of
                      unusual securities-trading activity, commissioned by Bloomberg News, depicted the Canadian
                      securities market as the black sheep among its G-7 counterparts. The evidence was the
                      observation by Measuredmarkets of "aberrant trading patterns" preceding 33 of the 52
                      Canadian mergers last year with a value of $200 million or more.
"

                                  (Source: http://www.thestar.com/article/200828 )
                               


                                
The American, Canadian and British markets give much more lip service to
                      policing insider trading than do other countries.  If insider trading can be shown to be
                      rampant in the UK, too, imagine how helpful TigerSoft will be for someone trading
                      in another market.
Here are articles about truly rampant insider trading in South Africa (1988).
                      Casino capitalism in Australia. 1991 and Hong Kong (2007).

                                 How do the British handle such cases?   James Lumley of Bloomberg News
                     reports: "
Insider trading may have occurred before almost a quarter of British takeover announcements
                     in 2005 and a third in 2004, the country's market regulator said Wednesday.  The frequency of "informed
                     price movements" in advance of takeovers is little changed since 2000, the regulator, the Financial
                     Services Authority in London, said in a "market cleanliness" survey...In 2005, there were unexplained
                     stock movements before 24 percent of takeover announcements relating to companies on the London
                     Stock Exchange, the FSA said. In 2004, the figure was 32 percent. There were suspicious trades
                     before 24 percent of announced transactions in 2000.  "These results are really only the tip of the iceberg,"
                     said Ian Mason, a former enforcement lawyer with the regulator who is now a lawyer at Barlow Lyde &
                     Gilbert in London. "They don't look at things like debt markets, swaps and derivatives where a lot of
                     insider trading is probably going on, but is harder to detect."  In 2005, there were 177 takeover
                     announcements, the FSA said. There were unexplained price movements before 42 of them. In connection
                     with the 102 takeover announcements of 2004, 33 showed unexplained movement.  The FSA must secure
                     a high- profile prosecution if it wants to have more success in stopping insider trading, Mason said. 
                     The FSA fined a former GLF Partners LP director, Philippe Jabre, 750,000 for trading on confidential
                     information about a stock sale in its most successful case last year.
                             (Source: http://www.iht.com/articles/2007/03/07/bloomberg/bxinvest.php )

                                  I decided to write this essay after looking at the Northern Rock chart shown below.
                     Clearly insiders got wind of the precarious state of the bank's finances.  They sold and their
                     hedge fund chums sold short.  We spot insider selling at TigerSoft by seeing the stock
                     underperform the market and then show a TigerSoft Accumulation Index reading drop
                     below -.25.  (We have found readings above +.50 to be more reliable in detecting insider
                     buying).  
The Tiger Sell S12 with accompanying readings below -.25 by the Tiger Accumulation
                     index, shown below, took place with Northern Rock shares above 800 pence.  They fell 75%
                     in three months.
  (TigerSoft provides users data on 1400 stocks, etc, including most of the FTE-100.)

                                                                       Heavy Shorting of The Rock
                           "
As queues of worried savers snaked around branches of Northern Rock last week, bottles of
                       Cristal champagne were put on ice in the wine bars of Mayfair.  The upmarket district in the West End of
                       London is home to many of the financial speculators who have made a mint out of the mortgage bank's woes.
                       Hedge funds - as well as traders in some of the big City investment banks - have been betting heavily for
                       months that Northern Rock was facing serious funding problems and its shares were on their way south.
                       Their concerns proved well founded.  The collapse in Northern Rock's share-price has been spectacular
                       since the BBC revealed that the Newcastle-based lender had applied to the Bank of England for emergency
                       funding...
                          
"Shorting the Rock.  Last Thursday, Mervyn King, the governor of the Bank of England, said that he became
                              aware that Northern Rock was facing serious difficulties only in August.  The hedge fund community seems
                              to have sensed that something was seriously awry much sooner.  At the end of June, rising interest rates
                              triggered a profits warning from Northern Rock and prompted renewed questions about the bank's business model.
                              At that time only about 7% of Northern Rock's shares had been "shorted", according figures from Data Explorers,
                              which collects securities-lending information for investors.  By the end of July, that short-position had grown to
                              some 15% of the bank's shares, and ahead of last week's announcement from the Bank of England it has passed the
                              20% mark (with a single hedge fund said to have been behind almost half that position).   That compares to an
                              average of short-position of about 3.5%across the banking sector as a whole.  Data Explorers puts the overall
                              profits for those short-sellers of Northern Rock shares back in June at somewhere just north of 100m.  Others in
                              the hedge fund community reckon the overall profit from shorting Northern Rock is much higher, and could be
                              as much as 1bn.  "  (Source:
http://news.bbc.co.uk/1/hi/business/7007116.stm )

                           For more comments on insider selling at Northern Rock, go to
                                                      http://www.order-order.com/2007/11/northern-rock-ceo-sold-millions-in.html

           ==================== British Northern Rock Debacle ===================================                             
                     
     
NRK-L.gif (13128 bytes)

                       Black Rock has gotten all the publicity.  But a number of other British stocks int he FTSE-100
              show a similar technical pattern: heavy distribution and insider selling.  They start to underperform
              the general market and the Tiger Accumulation Index drops below -.25.  The sell signals gives Tiger
              users additonal points when to sell these stocks short.

              --------------------------------- BARCLAY's BANK -------------------------------------------------
              wpe2D.jpg (48752 bytes)

           ======================== BDEV   Barratt Dev ===============================
           wpe2E.jpg (46375 bytes)

           ======================== BLND    British Land ===================
           wpe2F.jpg (67238 bytes)

     ======================== DMGT   =================== ===================
     wpe30.jpg (44101 bytes)
    ================================ EXPN ==========================================
    wpe31.jpg (68121 bytes)

   ======================  HMSO ========================================
    wpe32.jpg (61415 bytes)

    ======================  HOME ========================================
    wpe33.jpg (62232 bytes)

   ========================== IHG =====================================
   wpe34.jpg (65829 bytes)

   ================ KGP ==============================================
   wpe35.jpg (42684 bytes)

   ===================== RBS - Royal Bank of Scotland =================================
   wpe36.jpg (58930 bytes)

   ===================  WOS       =================================================
  wpe37.jpg (61065 bytes)

   ======================= WPP ==========================================
  wpe38.jpg (68547 bytes)

 

 

            "Yes! We finally captured Martha Stewart. You know, with all the massive and almost completely
         unpunished fraud perpetrated on the public by companies like Enron, Global Crossing, and Tyco
         we finally got the ring leader.    —Jon Stewart

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         Martha Goes To The Big House for Insider Trading.

Martha Stewart was convicted Friday of obstructing justice and lying
to the government about a superbly timed stock sale, a devastating
verdict that probably means prison for the woman who epitomizes
meticulous homemaking and gracious living.

The jury of eight women and four men deliberated three days
before convicting Stewart of all counts against her. The charges
carry up to 20 years in prison, but Stewart will most certainly get much less than that under federal sentencing guidelines.

Her ex-stockbroker Peter Bacanovic, 41, was convicted on all but
one count against him, making a false statement.

The charges centered on why Stewart dumped about $228,000
worth of ImClone Systems stock on Dec. 27, 2001, just a day before
it was announced that the Food and Drug Administration had rejected
ImClone's application for approval of a cancer drug, an announcement
sent ImClone's stock plummeting.

Stewart and Bacanovic claimed they had a standing agreement
to sell when the price fell below $60. But the government contended
that was a phony cover story and that Stewart sold because she was
tipped by her broker that ImClone CEO Sam Waksal was frantically trying to dump his own holdings.

   
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