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  • Insiders Persistent At Celsion [View article]
    Hi Doug.

    I’m afraid I have to forego keeping our sidestring going on this board. We answered at first because we thought leaving your comment of how worthless insider data was unanswered would show a lack of commitment on our part. But I’m beginning to see a pattern of straw-man arguments and not so subtle (and misdirected) digs in your comments--not the core of a valuable discussion. So I feel it prudent to sign off sooner rather than later.

    Given that you seem to dislike both insider activity as an indicator, and CLSN as a potential high-risk/high-reward punt, I don’t quite know what your goal is on this comment board. We all know that CLSN is a high-risk/high-reward stock, and that any investment process or data stream is not perfect. But I think we relayed both those points pretty well ourselves in the actual article.

    In the end, I’m sorry your extensive investigations have come to a different conclusion regarding the profitability of using insider activity than a long body of academic studies and (more importantly to me) our own experience using the data as a first screen. InsiderInsights’ body of work is substantial, well documented, and well considered. I will let it, and our previous comments, stand on their own in defense of our approach and reputation.

    I’ll also leave it to others here to answer (or not) any further commentary from you. There is a real string going on specific to CLSN, and I hope that continues.
    May 29 09:47 AM | 2 Likes Like |Link to Comment
  • Insiders Persistent At Celsion [View article]
    Hi Gentlemen. Jonathan Moreland at InsiderInsights here. I was told by the marketing guys that I should join this comment string yesterday after Douglas’ first comment. But I see that the string has taken on a life of its own. Still, I think it may be useful for me to add some points and opinions to the very thoughtful and heartfelt commentary already here.

    Douglas, let me try to surprise you by first agreeing with several of your points. I agree that “deploying capital should be based on one's usual stock evaluation criteria, not insider transactions”. I agree that “there are no shortcuts. Investing based on insider activity is, like everything else in this business, a lot of hard work”. I also agree that most insider stories on free web sites tend to relay news more than actionable investing advice, and that blindly buying into stocks mentioned in such newsy stories (usually pointing out high dollar value transactions) can be outright dangerous.

    The biggest mistake I see investors make in using insider data is to assume that any large dollar transaction must be significant, and they invest right away based on a seemingly big insider transaction. Anyone who thinks this data stream gives up profitable investing intelligence that easy gets what they deserve.

    The second biggest mistake I see is that people assume that insider data is not useful at all. This second mistake often results from an investor’s experience of losing money after making the aforementioned first biggest mistake. This mistake may also be based on the seemingly logical view that, if the insider really did have some insight about their stock when they traded, it would be illegal--another canard.

    Douglas, I’m not sure what in your experience has generated your conclusion that “99.9% of insider buying has zero value” and that it’s all a bunch of window dressing, but if your conclusion is based on returns from stocks featured in the same sort of free insider pieces you correctly identify as not particularly useful, then I think we’ve found at least part of the answer.

    Having spent the past 25 years analyzing insider behavior for investment intelligence, I’ve come to a much different conclusion. I’ve come to appreciate insider data as the best first screen I know for determining where I should focus my finite and very valuable (to me at least) research time. I’m a fundamental analyst by training. But with 10,000 potential stocks to buy for myself or clients, where the heck do I start? Digging into 10ks and Qs, calling management, reading related publications, building earnings models—it’s a tremendous amount of work. And I long ago identified that insider data is that effective way for me enrich the quality of firms I put into my fundamental research process. I waste less time researching stocks that I can’t act on, and improve my returns to boot.

    So it may sound odd for this insider guy to say, but I actually don’t buy stocks because insiders do. I buy them when my fundamental process identifies an opportunity that I’ve concluded has an attractive risk/reward profile. Of course, I never would have put the time into finding out if the stock was fundamentally attractive if not for the significant insider signal, but the insider activity is not the trigger. It is the first screen. So when my stocks don’t do as I expect, I don’t blame the insider data as being useless. I blame my fundamental research as being faulty, or just accept that no stock is a sure thing, and as long as I have more winners than losers and have winners that go up more than the losers go down, I’m doing well.

    So, Douglas, we don’t seem far apart on that point. But we do seem to be far apart on what constitutes a significant insider signal—and I believe that’s where your disenchantment with this data stream has evolved. You dismiss the Celsion activity as window dressing, but then you state adamantly that an example of extraordinary insider activity would be “C-level executives buying shares on the open market in multiples of their salary”. Unfortunately, my research has found that even that is too simplistic a rule of thumb to hang a significant insider signal on. It is the definition of making the “biggest mistake” I mention above.

    The analogy I’d use for this “biggest mistake” would be someone who calls himself a growth investor, and who expects to make big bucks by blindly buying all the stocks of firm’s that post 100% year-over-year EPS growth. But what is the nature of that seemingly significant piece of growth data? Did EPS increase from $1 to $2, or 1 cent to 2 cents? What is the quality of the earnings? Are their extraordinary items to back out or add? What is the trend in earnings? Is this a one-off bonzo event that isn’t likely to be repeated?

    This extra analysis of "growth" seems obvious to us all. But why do so many investors expect insider data not to need the same effort?

    Analyzing insider data for significance is just as involved, but most investors neither pay up for the value added insider data and analytical tools to asses it, or put in the extra time they should with any free data they get hold of. There is an entire level of analysis to do based on numerous aspects of an insider trade coupled with several behavioral factors. Dollar value is just one (and arguably the simplest) of the factors we incorporate into our final “score”.

    In our weekly Newsletter, we have data tables, a “New Finds” list of the subset of those stocks from the data tables that met our threshold of insider significance, and an ongoing Recommended List of stocks that passed both our insider and fundamental criteria. Michael Dell’s series of purchases of $100 million and $150 million over the past few years absolutely hit the data tables. But DELL never even made it to our New Finds tables. And anyone who bought DELL based on that c-level exec’s big buys deserved to lose money. But the fault is that of the investor who was too lazy to do the work needed to use that insider data properly, not the fault of the data.

    Was Michael Dell window dressing? I don’t know and I don’t care. You seem obsessed with window dressing, but I’ve met and talked with some of these execs and directors who have made mere $10k purchases at microcap firms. They just don’t have the money you think they do. $10k is real money for a lot of them. And when you see 5 years of transaction history for them that’s littered with $1k and $2k buys, and there is suddenly a $10k buy, that’s significant behavior. You have to relate the size (share wise and dollar wise) to the individual making the trade—not have a blanket rule of thumb about a set threshold of dollar value that is significant in all cases.

    In any case, I’ve found that window dressing scores similarly to other much more numerous transactions that are just plain “noise” when it comes down to it, and is fairly easy to discount.

    It’s late. I’m starting to ramble. And I have a newsletter to put out, a (second) book to write on this subject, and over 100 stocks to analyze for insider significance given the peak Form 4 filing season we’re in after Q1 trading windows have opened. So I’ll leave this comment with a couple stats:

    The Recommended List of our InsiderInsights Newsletter has 502 closed positions since inception in late 2001, and they have averaged a gain of 9.8% over an average holding period of 25.7 weeks. Of those 502 closed positions, 64 are of stocks in the biotech/medical device industries. This subset average 17.2% gain over a 26.5 week holding period. The original stock picking stemming from insider activity is just a part of the out performance, though. Managing a biotech position after it is selected is nearly as important to the final success (or not) of the position. And that has nothing to do with insiders most of the time.

    You’re not going to see numbers like that in any spreadsheet of stocks plucked from insider columns on free websites. Your challenge to PK to do that is setting up a straw man. But you know that. You intimated yourself that you get what you pay for. InsiderInsights is a service that serves a large institutional base right now. To be blunt, our presence on free sites is a cost to us, taken from our marketing budget. We are trying to add value to the retail investor through these efforts as we also try to educate and increase our exposure to this market. But in the end our best and complete work will always have to paid for. It cannot be otherwise. We have bills to pay as well.

    Regards, and much respect to all that have commented. There's obviously a lot of experience behind everyone's opinions here. And everything I've written is, as always, just my $0.02 based on my experiences.
    May 24 10:56 PM | 2 Likes Like |Link to Comment
  • Top Insider Trades On May 22: Facebook IPO Sales [View article]
    Hi JR. Yes, worth noting...and we have in our formal research on PKY in our InsiderInsights newsletter. For any blog piece, however, we have to take a lighter approach. So we just stuck with what is not "subject" to anything for PKY. We didn't even note the pending TPG transaction since it would have entailed much more explanation. Hopefully readers understand that we can't possibly put the same research/editorial time into our blog posts as we do our subscription-based independent research. After all, we have to pay the bills too.

    But with knowledgeable commentators like yourself, the detail is getting filled in anyway. Thanks!
    May 23 11:29 AM | Likes Like |Link to Comment
  • Insiders Persistent At Celsion [View article]
    Hi PK. Agreed about the specifics of the November disappointment, As we purposefully worded above, the issue was that HEAT "failed to meet expectations for early success". It did not, as you point out, "fail" in any final clinical sense.

    I disagree a bit with putting "disappointment" in quotes, however, and also that the "failure" can be dismissed as one of simply not meeting "wild speculation" of early success. I'd replace the term "wild speculation" with "obvious expectation".

    Whether one agreed with the expectation is less important than recognizing that the expectation was what was driving the stock at that time--fair or not. The stock price is the final arbiter of being right or wrong from an investment POV, and CLSN went down big time after the obvious expectation of early success was dashed.

    All of us long CLSN now are likely going to have a choice later this summer if (as we think likely) the stock begins to trade higher again under renewed expectation that HEAT will finally wrap up successfully. Do you take profits as hope starts springing eternal (again) about the HEAT trial results later this year, or do you let any profits ride into the final HEAT announcement?

    Although it seems that we all think the odds of success for HEAT are better than average, we've been burnt by milestone announcements enough to think more prudently about how to play biotechs. We've often taken half our profits (when we're fortunate enough to get them) leading up to the milestone announcement, and only let half our remaining bet ride into any actual event.

    This is consistent with how insiders have helped us profit in this space. Specifically, insiders buying a beaten-down biotech have tended to indicate very favorable odds of a biotech stock trading well into the next big milestone date. But about the actual FDA decision or milestone announcement actually being positive? Insiders' track record is still good, but not as dependable as indicating the positive trading leading up to the decision.

    A bit of a tangent, but hope it makes sense. We actually find quite a few biotech names with insiders, so expect more posts from with this theme. In the meantime, we absolutely appreciate your obviously knowledgeable comments.

    As always, just our $0.02.
    May 23 10:47 AM | Likes Like |Link to Comment
  • Insiders Persistent At Celsion [View article]
    Hi PK. Thanks for the added specificity. The more detail the better.
    May 23 10:09 AM | Likes Like |Link to Comment
  • Staying Aboard Air Transport [View article]
    No. Not right. Just pointing out arguably under-valued stocks that insiders are buying themselves in case you don't think the worst will come to pass. I'm hardly cheerleading.

    But you seem to expect the worst--and you may not be wrong. So the relevant portion of this piece for you appears to be:
    "ATSG's chart will no-doubt turn ugly in a hurry if Europe's debt problems turn contagious, but so will those of most every stock. If that's you're major concern, you probably aren't and shouldn't be looking for any new long ideas."
    May 22 05:31 PM | 1 Like Like |Link to Comment
  • Top Insider Trades On May 16: Avoid The Noise [View article]
    Hi WayLock.

    Thanks for the feedback..and the confusion was ours. The instructions to the author were not communicated well, and THRX should not have been paired with COMV in the example we were presenting. Obviously the THRX purchase by GSK was not a full takeover, but an increase in its stake.

    Hopefully the larger points of the piece weren't lost on you, and that you'll appreciate the extra effort we take to demarcate real open-market purchases from the ones that are labelled open-market, but actually done off market for any number of reasons. By the way, we also analyze option-related trades in real-time to see if incentive options were sold completely, in part, or not at all. Those various possibilities also generate one of our proprietary Transaction Types.
    May 19 09:11 AM | Likes Like |Link to Comment
  • Top Insider Trades May 14, 2012: Repros [View article]
    Hi Nick.

    I don't know anyone at Perceptive, and have no position in RPRX. I also don't have time to respond to all comments on our articles, but thought I'd do one more round here.

    According to the filings, Perceptive didn't flip its TRMS stake. Even our Free Data shows that they allowed 2.34 million TRMS shares to transfer as part of the merger with Synageva on 11/2/11. That, after filing a Form 3 just a few months earlier on 7/28/11. They appear to have made a good trade.


    The 2005 trading violation you cite for Perceptive is odious. I hope they got fined big time. A violation and fine doesn't automatically make any other trade they undertake a crime, however. If that were the case, most big financial institutions would trade under a cloud (actually, with that in mind maybe I do agree with you!)

    You may also be interested in viewing RPRX' institutional investors at

    Not sure why the fact that Perceptive has been in RPRX for over a year is "laughable". I'll leave that comment be.

    Obviously this RPRX short of yours is very important to you. And if you find real proof to indict Perceptive of some manipulation, by all means get it to whatever authority you can. But the profitable trades Perceptive has reported on various Form 4s would not seem to be that proof.

    Again, we have no positions in RPRX, and I doubt we can respond to any other comments you care to make in this area. Just trying to offer whatever facts we can from the filings to help out.
    May 16 08:21 PM | Likes Like |Link to Comment
  • Top Insider Trades May 14, 2012: Repros [View article]
    Hi Nick.

    I don't know the basis of your "pumper" conclusion. Perceptive has been in the stock long enough to qualify for long-term capital gains if it decided to take profits. It is also publicly disclosing its trades, not hiding them.

    If disclosure is deemed "pumping", then you'd be questioning the whole basis for the Securities Exchange Act of 1934. At the time that very forward-looking piece of legislation was passed, the concept of disclosure was viewed as desirable, and that "sunshine would be the best disinfectant" for at least some of the nasty illegal trades insiders had been undertaking leading up to the 1929 crash.

    That said, even if you believe the Perceptive signal is legitimate, you would still only follow insiders into the stock if you believed the fundamentals and future prospects of Repros look attractive. You obviously don't, and that's fine.

    At InsiderInsights, we pass on plenty of stocks that have significant insider signals (by our scoring metrics), but don't pass subsequent fundamental and/or technical scrutiny. In the end, we use insider data as our first screen to narrow down the names we spend our finite time analyzing. But as a first screen, it is the best one we know of to identify the most promising potential investments among the thousands of issues we could purchase or short on any given day.

    As always, just our $0.02.
    May 15 08:59 AM | 1 Like Like |Link to Comment
  • Top Insider Trades May 9, 2012: Sirius Buying [View article]
    Whoa guys. There's no conspiracy in the forward contract. Forward contracts are well-established financial instruments that simply lock in a future transaction between agreeing counterparties. The price and date of the transaction are negotiated by the counterparties, and the agreed-to terms are put in the contract. Sure, there is counterparty risk (eg. one party could back out), but I doubt that's a risk here. And though it certainly would be interesting to know who the seller is, the fact that they are unidentified is unremarkable, and also not a conspiracy.

    The main bit of investment intelligence I gathered from the forward contract was that there was obviously a willing seller of so many SIRI shares at the then market price. Since Liberty didn't have to offer a premium for the large block, it seems to indicate just how willing the large shareholder was to get out.

    Reasonable minds can differ on that interpretation, but the bottom line seems to be that it's a good thing for current SIRI holders that Liberty has a huge appetite for these shares given the obnoxiously large number of shares outstanding there are.

    As always, just my $0.02.
    May 10 05:54 PM | 1 Like Like |Link to Comment
  • A Halo Comes Off [View article]
    Hi Allen. Glad you found the article useful. I have to defend the good sell-side analysts I talked with as part of the piece, though. I certainly didn't include their comments to "expose" them in any way. The incentives for sell-side analysts may not be ideal, but compared to the ethics of people working in other parts of the majors, I've found the analysts at the banks to be generally much more honest.

    In any case, I'm not here to start a string about that topic, and I'm sure many investors feel as you do. But to the extent that your opinion of the analysts in my piece stems from their seeming inability to predict the failure of HyQvia to get FDA approval, my takeaway is different. The recent disappointment illustrates once again to me how difficult it is to predict FDA decisions--even for intelligent people whose job it is to follow such matters.

    Even now, the concerns raised by the FDA regarding HyQvia could have negative ramifications for Halozyme's other products. Let's not pretend otherwise. To buy into HALO now, you have to think the odds of that are low enough to bet against, and the rewards are high enough to make the bet worthwhile.

    That's my conclusion. Reasonable minds may differ.
    May 2 09:11 AM | Likes Like |Link to Comment
  • Herculean Yield Still Attracts Insiders [View article]
    Hi Jonathan.

    As you see, there was some added insider activity between the time we penned our HTGC update, and it being published on SA. One option-related sale was minor. The entire company profile remains rated as significantly posive by our scoring metrics.

    FYI, an even better way to view the HTGC insider history at is to click the "Remove The Noise" link just above the "Search" button. That takes out the insignificant non open-market trades, and makes the bullish insider profile even more obvious at a glance. That "Remove The Noise" feature comes in handy quite often.
    Mar 19 12:56 PM | Likes Like |Link to Comment
  • Herculean Yield Still Attracts Insiders [View article]
    Hi Herbert.

    Good question. That 7% is just our subjective opinion of the lowest indicated yield we would still rate HTGC a Buy at given the facts at hand right now. Reasonable minds may certainly differ on that metric, though.
    Mar 19 12:46 PM | Likes Like |Link to Comment