Insider Selling: British Style:
Is Northern Rock The Tip of The UK Ice Berg?
Heavy Insider Selling Is Shown in These Stocks.
British Land Development
Home Retail Group
Royal Bank of Scotland
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
short what they're selling. This is especially true for trading non-US markets,
insider trading is, if possible, even more rampant than in the
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
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
Assume you are a hedge fund manager. The sense I get is that, as long as you show
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
act too wildly on the information, the SEC will not have your trade flagged and you're
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
of calls traded jumps from 5,000 to 18,000 just before a buy
out or when (3)
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
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."
The American, Canadian and British markets give much more lip
policing insider trading than do other countries. If insider trading can be shown to
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
Casino capitalism in
Australia. 1991 and Hong
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,
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
Stock Exchange, the FSA said. In 2004, the figure was 32 percent. There were suspicious
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
with the 102 takeover announcements of 2004, 33 showed unexplained movement. The FSA
a high- profile prosecution if it wants to have more success in stopping insider trading,
The FSA fined a former GLF Partners LP director, Philippe Jabre, £750,000 for trading on
information about a stock sale in its most successful case last year.
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
hedge fund chums sold short. We spot insider selling at TigerSoft by seeing the
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
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
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
Their concerns proved well founded. The collapse in Northern Rock's share-price has
since the BBC revealed that the Newcastle-based lender had applied to the Bank of England
"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
Northern Rock Debacle ===================================
Black Rock has gotten all the publicity. But a number of other British stocks int he
similar technical pattern: heavy distribution and insider selling. They start to
market and the Tiger Accumulation Index drops below -.25. The sell signals gives
additonal points when to sell these stocks short.
--------------------------------- BARCLAY's BANK
Barratt Dev ===============================
British Land ===================
======================== DMGT ===================
====================== HMSO ========================================
========================== IHG =====================================
================ KGP ==============================================
===================== RBS - Royal Bank of Scotland
======================= WPP ==========================================
"Yes! We finally captured Martha Stewart. You know, with all the massive and
unpunished fraud perpetrated on the
public by companies like Enron, Global Crossing, and Tyco
we finally got the ring leader.
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