Here’s why this old website is a powerful tool that enhances your investing prowess!
Every Wednesday, we publish articles about investing because we believe this activity can help you achieve true financial freedom through wealth creation. Today, we’ll talk about a website that provides lots of data to institutional investors and why you should use it too. Do you want to learn more about this website? Keep reading to know more!
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Here’s why this old website is a powerful tool that enhances your investing prowess! Institutional investors, to grow and protect their investment portfolios, need access to information that would allow them to gain insights about a particular stock and the whole market. One of the ways these institutions go about this is by visiting an old and obscure website that contains some of the most useful information available investors can make use of. The website’s name?
Even though the secform4.com website doesn’t provide extensive research, it serves as a valuable resource for Wall Street professionals. In fact, the information found on this web database is so powerful that it can change how investors view the entire market. How, you may ask? Whenever an individual, a.k.a., an insider, within a company buys or sells stock, the U.S. Securities and Exchange Commission (SEC) requires the transaction to be reported in what’s called the Form 4. Subsequently, these filings are made available to the public on the secform4.com website. According to Rob Spivey, the Director of Research at Valens Research and Altimetry Financial Research, the information found in the Form 4 filings of companies can help investors identify buying and selling opportunities in the market. Aside from compiling filings, the secform4.com website can analyze results as well. According to Spivey, the analyses found on the website aren’t surprising most of the time. After all, management teams tend to buy stock at cheap prices and sell when it’s expensive. To further illustrate secform4.com website’s ability to provide investors with insights related to buying and selling stock, let’s take a look at the chart below:
The chart displays the daily ratio of buy and sell filings from public Form 4 data. A higher ratio indicates an increase in insider buying activity, a signal that management teams are bullish in their sentiment. On the flip side, a lower ratio indicates more selling, implying that management is bearish on their sentiment. As seen from the chart, the S&P 500 index took a nose dive in early 2020 while the insider buying surged! Simply said, management teams knew that the stocks of their respective companies were cheap, so they capitalized on that buying opportunity. Of course, it should be noted that the scenario we highlighted above doesn’t happen ALL the time. Every once in a while, something different happens: Stock starts dropping but management isn’t buying, or it keeps surging higher while insiders continue to buy. When stocks are bought even though prices are soaring, this means that insider sentiment about a company is very high. As a result, management teams will keep buying regardless of the financial cost. On the other hand, when insiders refuse to buy even though shares are on the cheap, this means that there are concerns about a firm and the overall macroeconomic outlook. So instead of putting their money at risk, insiders would rather wait and see even though the market is dropping. — As we’ve discussed above, the secform4.com website is a very powerful tool in helping investors make well-informed investment decisions. By publishing and tracking Form 4 filings, the website enables its users to understand the outlook that management teams have for their respective firms. Armed with that valuable insight, investors will know when to unload or buy stocks. In an uncertain economic environment and an unpredictable market, having the ability to know when to drop a stock or not is a huge difference maker for both seasoned and novice investors. So, if you want to improve your investing prowess and make well-informed decisions, keep the secform4.com website and other tools like it in mind whenever you survey the market for opportunities! Hope you’ve found this week’s insights interesting and helpful. According to Professor Joel Litman, Chairman and CEO of Valens Research and Chief Investment Strategist of Altimetry Financial Research, now is a terrible time to be a cash-poor business… and lots of companies are finding this out the hard way. Learn more about how you can stay safe when the market’s swelling bankruptcy wave crashes in next week’s article! |
