TipRanks Makes Breakthrough in Insider Trading Research

New York, USA, July 29, 2015 (Newswire.com) - ​​TipRanks, the world’s leading analyst ranking service - has released a new service that monitors and analyzes corporate insider transactions. TipRanks is also introducing new discretionary strategies for individual investors that generate a 5.45% monthly average return over no benchmark and a 4% monthly average return measured over the S&P 500.  

In June 2012, the Journal of Finance published an article titled “Decoding Inside Information” by L. Cohen and C. Malloy of Harvard University, and L. Pomorski of the University of Toronto. The article describes an empirical strategy in which the authors show how following “opportunistic” insider transactions can lead to a return of 0.82% a month.

In order to optimize the article’s strategy, TipRanks took a data driven approach based on its proprietary Financial Accountability Engine and followed only the transactions of Top Ranked Insiders - those listed in the top 100 Corporate Insiders. Corporate Insiders included in the list are those who previously generated the highest returns with their inside trading transactions out of 33,000 total SEC registered insiders.

TipRanks researchers have also omitted transactions that had no predictive value such as pre-ordered transactions, options exercised, and others.

The strategy was back tested over four years from April 2011 to July 2015 and each transaction was opened for a time period of one month, meaning that if a Top Ranked Insider reported to the SEC that he/she acquired stocks in a company he/she works for (or is a major shareholder of), TipRanks virtually bought the same stock and held it for a period of one month.

Results show that following a top performing insider would generate a 5.45% monthly return (75.7% annualized) over no benchmark and a 4% monthly return over the S&P 500. Out of the 50 months that were back tested, 38 generated positive returns, meaning that 76% of the transactions were profitable.

“We are very excited from the results we’re seeing,” said Uri Gruenbaum, CEO of TipRanks. “Our goal was always to ease the life of investors and provide tools that were once available only to financial institutions.”

TipRanks users can now see any transaction made by company directors, high ranked officers, and major shareholders, but more importantly they can see what that transaction really means based on the historical performance of each insider.

For more information, visit TipRanks.

About TipRanks:

TipRanks was founded in 2012 by Uri Gruenbaum and Gilad Gat and raised capital from former New York Governor Eliot Spitzer and Cornell Finance Professor Roni Michaeli. TipRanks provides a data-driven measure of accuracy for published financial advice. The proprietary Alpha generating technology is based on Natural Language Processing (NLP) and Machine Learning algorithms that constantly and accurately track, rank, and measure financial experts based on their stock ratings, calls, and predictions, bringing accountability into the markets.

TipRanks was awarded twice as Best in Show at Finovate New York and Finovate San Francisco in 2013 and as the Best Tool for Investment Advice at the Benzinga Fintech awards in April 2015.

For additional information:
​Carly Forster, Marketing Manager
​Carly@tipranks.com