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Money Buzz 4/04

Tracking insider selling and recover tax overpayments

By Jennifer Pellet • Apr 1, 2004

Opinions expressed by Entrepreneur contributors are their own.

Insider Scoop

If you've been tracking insider sales to time your owntransactions, watch out. Monitoring corporate insiders' stockselling as a market signal is growing less reliable as an investingstrategy, according to H. Nejat Seyhun, a finance professor at theUniversity of Michigan, Ann Arbor, and author of Investment Intelligence From InsiderTrading (MIT Press).

While insider selling is on the rise-higher now than it'sbeen since 1986, according to Vickers Stock Research-that trend ismisleading, says Seyhun. The huge number of options granted toinsiders over recent years has, in turn, increased the ratio ofinsider sales to purchases in the open market.

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