Insider Trading-Hess Corporatio {HES}
I am a fairly new trader but I do just fine trading. Hess Corporation came up on my radar screen and I looked inside and was
amazed by the number of inside trades going on there. It actually resembles what the insider trading of Enron looked like a few years
back. Question is how do you find out as a trader whether or not this much trading is a good thing or a bad thing?
Answers
3963 points
MNSL answered one year ago …
When insiders buy stocks on positive news of the company stock prices will go up in the near future. For example in some companies insiders buy stocks when they see turnaround situation, acquisition, new invention, market expansion, higher profits and awarding a contract to supply goods etc. Similarly insiders can sell their shares when there is a bad news. So as investors we must be able to get some ideas. In some instances it is difficult to identify insider trading. Some times they sell stock for personal reasons and sometimes insiders sell stocks to take advantage of higher stock price and once prices come down they will pick stock again.
I think insider trading is illegal. By doing this a person benefits by using their knowledge of nonpublic information.
I found interesting article on " in Defense of Insider Trading " in following web site:
http://arbyte.us/essays/Defense_of_Insider_Trading.html
4085 points
EthanR answered one year ago …
You didn't say if the insider trading was buying or selling, but I looked it up on yahoo finance, and it appears to be all selling within the last month. Much of it is by John Hess, but there are several other officers selling shares as well.
The general rule of insider trading is that insider buying is more significant than insider selling, because selling is done for many reasons, while buying is only done in expectation of price increase. However, when I see multiple persons selling, it picks up my radar as well. The other thing that I look at is whether or not it's "automatic selling". Automatic selling is far less indicative of a problem with the company, as that is just something that is set up way in advance without any knowledge of a company's future earnings. Much of the selling at HES is automatic, but much of it is not.
So putting this all together, I would say that it is possible that this stock will head lower in the near future, and I do think you are on to something, but not necessarily another Enron. You might want to take a look at the chart and decide if you want to short or play a put option.
951 points
Grudun answered one year ago …
Looking at the stats on Yahoo you can see that in the past few months the insiders have sold exactly as many shares are they bought. To me this indicates that the insiders think the share price is at a near term high and you should look at the technical indicators to see if you should short or buy a put option.
However this does not look like an Enron event. If it was the insiders would have sold SIGNIFICANTLY more shares than they bought. It is more likely that some of their options were about to expire and they did not want to increase their holdings when they could get the current share price(some of the options exercised resulted in profits of $70-$90 per share).
116 points
379 points
dustbusterz answered one year ago …
i would like to correct something EthanR said here (buying is only done in expectation of price increase.) this is not entirely true,although this could be the case in some instances.Companies can and do buy back stock when they are trying to prop up sagging stock prices, in a weakening economy and also when they have no idea as to how to better use their excessive cash on hand.So when looking to find stocks with insider buying, you have to look at why are they buying? It can be a good sign or it can be a negative sign.So don't just take it at face value that there is a lot of insider buying going on right now so it has to be a good sign, check it out closely .
Read more from dustbusterz
