How Insiders Beat the Market

Do Bullish Insiders Win?

BlueTrader performs real-time analysis of insider trading. We screen and contextualize all insider behaviour through our qualitative and quantitative ranking engines to detect stocks with the highest potential. BlueTrader's Bullish Insider Alerts have consistently out-perform the market both in back-testing and in live market scenarios. Since 2003, our Bullish Insider Alerts had an accuracy rate of 62.5% in predicting Alpha returns for equities in the U.S. market. Our Insider Analytics talgorithms succesfully flags stocks that insiders know they are about to over-perform the markets.

Mean returns for Bullish Insider Stock Alerts vs Comparably-sized peers

How Insider Trading Analytics Works

Trades based on BlueTrader's Bullish Insider Alerts consistently out-perform the market both in back-testing and in live market scenarios. Our analytics and algorithms were developed over years of extensive analysis, development, and testing.

BlueTrader's alerts are derived from analysis of insider buying and selling trends that are screened and contextualized through our proprietary filters and our qualitative and quantitative ranking engines. We look at who is buying and selling, cross-referenced with industry, market, and historical patterns that correspond to known performance trends. To be more precise, we analyze trades in context with the known trading history of the insider, the market evaluation of the company whose shares are being bought or sold, and other relevant factors.

150,000 key insiders are tracked in real-time across a range of industries. When any of them file an SEC form 4 statement, we take that trading information as a starting point for analysis. Next, we apply a proprietary qualitative screening test to the transaction to see if it qualifies as "interesting." This immediately weeds out the everyday sales that have no meaning in terms of the possibility of an emerging performance trend.

• Raw Data Input:
  SEC form 4 filings
• Qualitative Screening
  is this transaction
  "interesting"?
• if yes,
  Quantitative Modeling:
  is this transaction
  "significant"?
• if yes, Ranked
  Transaction Data:
  basis for actionable
  Bullish Alerts

If a sale is deemed interesting, we apply our proprietary quantitative modeling algorithm to see how interesting it is. This involves a multi-dimensional analysis in which the transaction is contextualized (trade composition, open vs. closed market, based on derivatives or not, the company's valuation metrics, and other factors) and mapped against both parallel and historical factors.

The results provide an indication of whether or not the trade signals a possible trend, and if so, how strongly it indicates a possible trend. A strong indicator triggers a Bullish Insider Alert.

Bullish Insider Alerts consistently spotted emerging trends before they were apparent, and the stocks they flagged consistently and significantly outperformed the market. Since BlueTrader went live in early 2011, the pattern has continued, with particularly successful results in the latter half of 2011 during that season's economic turmoil.