Dear Fellow Trader:
In the financial markets, everyone is looking to improve their edge. We’re talking about boosting a win percentage as a trader by a few percentage points… or squeaking out a little more annual gain to beat the market or a benchmark.
For many investors, they pay very close attention to what hedge fund managers are doing with their money. They’ll wait each quarter for the 13F filings of fund managers like Bill Ackman, Carl Icahn, Daniel Loeb or Starboard Value to arrive… and they’ll just piggy back on those purchases. There’s always a lot of optimism — of course — when multiple hedge funds all buy the same stock at the same time.
There’s one problem with this approach.
Timing.
Today, I want to explain why following 13Fs can be underwhelming, and direct you to a different group of buyers who can help you build REAL conviction as an investor.
13Fs Are Exciting, BUT…
Hedge funds and big money managers must file 13Fs with the Securities and Exchange Commission (SEC) if they have more than $100 million in assets under management. Investors who watch these filings are looking to see how these buyers might make changes to the company’s operations or even fuel M&A activity.
In addition, investors who watch these 13Fs might identify long-term trends in institutional investing strategies. This information can assist investors in aligning their own portfolios with market sentiment and industry trends.
But there’s a big problem for investors who buy when they hear that Bill Ackman took a stake in a company. That information is old news.
You see, 13F filings are submitted at the end of each quarter, and have a 45-day reporting deadline. By the time that these filings emerge, six weeks have passed. That’s a very long time in the world of investing and markets.
What’s worse? These 13F filings only show holdings and positions. They don’t tell you why the hedge fund manager is buying up stock. That makes it hard for the investor to understand the strategy of the money manager. It doesn’t reveal the intentions.
Now, I’ve long loved following 13Fs. But there’s a better buy signal, to be honest.
And this signal comes on a regular basis. It’s called “insider cluster buying.”
What is Cluster Buying?
Cluster buying among executives and corporate insiders refers to a situation when multiple people buy the company stock within a short window of time.
I view this as one of the most important buying signals in the market. When many insiders at a company all buy their stock at the same time, they are doing so for one reason.
They are putting their money down and buying their stock because they believe that shares will go up in price. When cluster buying happens, many executives file Form 4 documents with the SEC.
Companies that had cluster buying in the last month include Martin Midstream (MMLP), LendingClub (LC), TrueBlue (TBI), Local Bounti (LCOL), Real Good Food (RGF), Trustco (TRST), Northern Trust (NTRS), Sportsman’s Warehouse (SPWH), Overstock (OSTK) and Barnes Group (B).
There are many winners across that list. Local Bounti shares are up 74% since the average trade of $1.68 per share. Barnes and Lending Club are both up by double-digit percentage points.
Cluster buying is a critical tool that we use over at Executive Payouts Unlimited. Now that our Equity Signals are positive, it’s time to trade. For more insight on how we use these signals, check out my recent presentation.
Chat soon,
Garrett Baldwin
*This is for informational and educational purposes only. There is an inherent risk in trading, so trade at your own risk.
P.S. You Have to See This Loophole
I have a secret loophole to share…
Jeffry Turnmire just poured $213,000 of his family’s hard-earned money into one asset…
Before you call him crazy, let me explain.
I think it will make a lot more sense after this quick training.
Market Momentum is GREEN
The market is holding up for now, but we’re at key resistance levels. With a light calendar this week, we could see continued consolidation across sectors. That will lead up to a critical week of economic data and monthly options expiration trading next week.
*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
