Want to be notified when a new article is posted? Entere your email here.

Friday, February 18, 2005

Insider trading, Neglected Firms, and Market efficiency

Wednesday's Wall Street Journal carried a short piece titled "Insiders Buy Ignored Biotech Cerus" (subscription required for online access). It described how some investment funds use insider trading patterns as a tool for stock selection. The central idea was that insider trades make a better indicator for "neglected" stocks (those with few or no analysts covering them).

It's a good piece to focus discussion on efficient markets, asymmetric information and signaling, and the role of analysts as information producers.

No comments: