The Portfolio Channel Insider Opportunities Investment
focuses on those stocks where the people who know the company best are buying - and buying
In his book, Investment Intelligence from Insider Trading, Nejat Seyhun, who just happens to be a leading
researcher in the field of insider buying and selling, illustrated that when top executives bought large amounts of his/her
company's stock, the stock outperformed the broad market by +8.9% over the next 12 months. And given that the long-term
average annual return for the stock market has been +9.5% over he past 70 years, this means that stocks with heavy insider
buying possess returns that are 93.7% better than the market itself. And then on the other hand, when an insider sold large
amounts of his/her stock, Mr. Seyhun found that the stock underperformed the market by -5.4%, which is nearly 60% less than
the market returns.
In addition, corporate insiders are often considered the "smart money" by Wall Street. For example, the research firm of
Ned Davis Research reports that corporate insiders tend to be "relatively bullish at lows and relatively bearish at tops."
So, doesn't it make sense to (1) invest in stocks where the corporate insiders are buying and (2) avoid any company where
the insiders are selling?
If your answer is "yes", then the Insider Opportunities Investment Portfolio may be
just the ticket for you.
While the stock market can be challenging at times, the Insider portfolio strategy has proved successful in most every
market environment. For example, according to our research, those stocks where corporate insiders were buying heavily have
returnd +27.7% per year since early 1992, which is nearly three times the the buy-and-hold
return of +9.86%. In addition, our portfolio of insider stocks actually went up handsomely during the brutal bear market of
And here's one of the best parts - managing a portfolio focused only on stocks where the corporate insiders are buying
heavily, really isn't that hard as it only takes about 15 minutes a week to stay in tune with our portfolio.
How the Insider Opportunities Investment Portfolio
The strategy is easy to summarize: Instead of owning the biggest companies in each sector - as the S&P 500 Index does -
our plan is to own ONLY those companies in which the corporate insiders are buying - and buying heavily.
Every week the computers scour the available research on insider buying and then create a customized "insider score" for
each and every stock. Next, we create a list of all the stocks with the highest insider score (the top 20%). From there, our
team painstakingly reviews each of the top ranked "insider stocks" on an individual basis. We check out the charts from a
technical perspective. We review our rating for Earnings Strength. And we check our long-term fundamental models. While it
takes an enormous amount of time and energy, the goal is to identify the top rated stocks where those in the know just happen
to be buying - and buying heavily!
The Insider Opportunities Investment Portfolio also has a built in risk management
system. Each position in the portfolio is carefully monitored on a daily basis. If a position enters a downtrend or “breaks
down” on a technical basis, we cut the position – no question asked.
In addition, when our market risk model indicates that the risk of a major decline is high, we will hedge our equity exposure
via the use of inverse-ETF’s which are designed to increase in value when the market falls.
To sum up, only those stocks with the strongest performance, the top earnings strength, and the best insider ratings "make
it" into our Insider portfolio.
Let's Talk Performance of Insider Buying
It is said that the proof is in the pudding. So we thought we'd share the results of our strategy. Below is the performance
of the Insider Opportunities Investment Portfolio from the inception of our strategy on 12/15/2008 through the date
|The Insider Opportunities Investment
Real-Time Performance Results
For the Period 12/15/2008 - 3/15/2012
|Average Annual Return
Note: Investments in equities carry an inherent element of risk including the potential for significant loss
of principal. Past performance is not an indication of future results.
As you can see, even during difficult markets, buying the stocks that corporate insiders are buying heavily (and then
watching them like a hawk) has been able to dramatically outperform the S&P 500.
Testing the Insider System
Before we decided to go "live" with this concept, we hired the largest institutional research firm in the country
to conduct an independent test of the system. The test found that by making small adjustments to the portfolio each week, the
system had exceptionally impressive results.
|The Insider Stock
System Test Results
For the Period 3/1/92 – 9/30/08
Buy & Hold
|Return calculations are based on system testing for the period 3/1/92 – 9/30/08.
Please see important notes below on the limitations of system testing. Past performance is not a guarantee of future
Between March 6, 1992 and September 30, 2008, which was a period that contained three of the greatest Bull Markets of all
time and one of the worst Bear Market in a generation, the strategy would have produced a compound average annual gain of
+27.7% per year. (At that rate money doubles every 2.6 years!)
Do Insider Ratings Really Matter?
We certainly think so, but sometimes it is best to let the numbers do the talking. Below is a table showing the average
annualized returns for each rating category, as determined by historical testing performed by one of the country's largest
independent institutional research firms.
|| Heavy Buying
|| Light Buying
|| Light Selling
|| Heavy Selling
We Tell You EXACTLY What We're doing
Every week, we send members a TRADE ALERT detailing the changes that we are making to the portfolio. It's that
simple. We tell you what we're buying and what we're selling.
We Publish Performance
At PortfolioChannel.com, we believe that performance is job # 1. And unlike so many
newsletter services out there, we don't hide our performance. Every week we update the current performance to the portfolio.
To sum up, we do all the legwork, we you EXACTLY what we are about to do and why, and then we follow it up with a
performance summary every week.
What You Receive
Before anyone becomes a member of our service, we feel it is important for them to understand exactly what they will be
getting from us. So here's a summary of the reports you will begin receiving once you've signed up for a free-trial:
Real-Time Trade Alerts - We send a real-time ALERT! via email
BEFORE every trade we make. These live reports tell members EXACTLY what we are about to do and why we are doing it. And to
avoid any conflicts, it is our policy to wait until after we have received the ALERT to actually enter our trades. Each
- Action (Buy or Sell)
- Company Name
- Ticker Symbol
- Position Size
Daily State of the Markets - As a subscriber, you'll receive our
"Daily State of the Markets" market analysis and commentary each morning BEFORE the opening bell.
Risk Management Strategies Are Built In!
As the saying goes, "sometimes the best offense is a good defense." So, in addition to a powerful stock selection strategy
designed to outperform by a wide margin in Bull markets, The Insider
Opportunities Investment Portfolio also has a risk management strategy built into the portfolio for when
the Bears begin to growl.
Our disciplined sell strategy is actually pretty darned simple. You see, we have no tolerance whatsoever for stocks
that are not technically healthy from a chart standpoint. Thus, whenever one of our holdings moves into a downtrend or breaks
important support -- we sell the stock, no questions asked.
While it may sound simplistic, this "bottom up" or stock-by-stock approach to managing risk causes us to automatically
reduce exposure to market risk during bear markets. And since one of the best ways to make money in the long run is to avoid
losing big money in the short run, this approach is an easy way to protect your net worth during bear market periods.
Let's Talk Price
The Insider Opportunities Investment Portfolio is a
"pro level" portfolio (we know for a fact that professional money managers use this exact approach to manage client accounts)
that can easily replace those closet-index mutual funds in your portfolio. And instead of paying asset managers 2% of your
portfolio, you can run your own privately managed portfolio for just $39.99 a month!
So if you are looking for an easy way to invest the exciting world of insider stocks, be sure to give this service a
Try the Insider Opportunities Investment Portfolio
The analysis and information in this report and on our website is for informational purposes only. No part of the
material presented in this report or on our websites is intended as an investment recommendation or investment advice. Neither
the information nor any opinion expressed nor any Portfolio constitutes a solicitation to purchase or sell securities or any
investment program. The opinions and forecasts expressed are those of the editors of and may not actually come to pass. The
opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific
security nor specific investment advice. Stocks should always consult an investment professional before making any investment.
Any investment decisions must in all cases be made by the reader or by his or her investment adviser. Do NOT ever purchase
any security without doing sufficient research. There is no guarantee that the investment objectives outlined will actually
come to pass. All opinions expressed herein are subject to change without notice. Neither the editor, employees, nor any of
their affiliates shall have any liability for any loss sustained by anyone who has relied on the information provided.
The analysis provided is based on both technical and fundamental research and is provided "as is" without warranty of any
kind, either expressed or implied. Although the information contained is derived from sources which are believed to be
reliable, they cannot be guaranteed.
The information contained in Insider Portfolio publications is provided by Ridge Publishing Co. Inc. (Ridge). One of the
principals of Ridge, Mr. David Moenning, is also President and majority shareholder of Heritage Capital Management, Inc. (HCM)
a Chicago-based money management firm. HCM is registered with the U.S. Securities and Exchange Commission as an investment
adviser. HCM also serves as a sub-advisor to other investment advisory firms. Ridge is a publisher and has not registered as
an investment adviser. Neither HCM nor Ridge is registered as a broker-dealer.
Employees and affiliates of HCM and Ridge may at times have positions in the securities referred to and may make purchases
or sales of these securities while publications are in circulation. Editors will indicate whether they or HCM has a position
in stocks or other securities mentioned in any publication. The disclosures will be accurate as of the time of publication and
may change thereafter without notice.
The performance of the Insider Ratings are linked monthly price changes of equal weighted hypothetical portfolios
consisting of those stocks with the indicated Insider Rating assuming monthly rebalancing zero transaction costs. Results do
not include dividends and are from the time period 3/3/1992 through 9/28/2008.
The returns shown for the Insider Portfolio are a hypothetical implementation of the portfolio strategy allocating equal
portions of the portfolio to buy rated stocks as chosen by our editors. Hypothetical returns do not reflect actual trading.
Please note that hypothetical test results do not take into account market conditions which could adversely affect management
Your actual results may differ from results reported for the model portfolio for many reasons, including, without
limitation: (i) performance results for the model portfolio do not reflect trading commissions that you may or may not incur;
(ii) performance results for the model portfolio do not account for the impact, if any, of certain market factors, such as
lack of liquidity, that may affect your results; (iii) the securities chosen for the model portfolio may be volatile, and
although the "purchase" or "sale" of a security in the model portfolio will not be made in the model portfolio until
confirmation that the email alert has been sent to all subscribers, delivery delays and other factors may cause the price you
obtain to differ substantially from the price at the time the alert was sent; and (iv) the prices of securities in the model
portfolio at the point in time you begin subscribing to our service may be higher than such prices at the time such stocks or
options were chosen for inclusion in the model portfolio.
Index returns are price only and do not include the reinvestment of dividends. The S&P 500 is a stock market index
containing the stocks of 500 large-cap corporations, most of which are US companies. The index is the most notable of the many
indices owned and maintained by Standard & Poor's, a division of McGraw-Hill. S&P 500 is used in reference not only to the
index but also to the 500 companies that have their common stock included in the index.
Investments in equities carry an inherent element of risk including the potential for significant loss of principal. Past
performance is not an indication of future results.