TigerSoft - www.tigersoft.com 1/4/2008 --- by William Schmidt, Ph.D.
Insider Trading: News and Reviews: Articles Found on the Net
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Insider Trading at Bear Stearns (BSC).
How A TigerSoft User Would Spot It And
Make Money from It.
FEDERAL INVESTIGATORS ARE PROBING INSIDER TRADING AT BEAR STEARNS
(Business Week: http://www.businessweek.com/bwdaily/dnflash/content/dec2007/db20071217_019781.htm?chan=top+news_top+news+index_top+story )
It seems likely that some insiders pulled their money out of the company's riskier hedge
funds, backed by subprime mortgages. The alleged withrawls occurred just when fund managers
were uging investors generally to stap put. "The Wall Street Journal subsequently reported that
Ralph Cioffi is the manager drawing scrutiny, after moving $2 million of his $6 million investment in the funds
into another Bear-managed hedge fund. BusinessWeek has learned the other Bear fund in question is the $228
million Bear Stearns Structured Risk Partners fund. People familiar with the probe say investigators have been
reaching out to investors in the highly leveraged funds, seeking information about the comments the funds'
managers made during the spring with regard to the issue of redemptions, as well as the funds' exposure to the
subprime mortgage market. The funds once controlled nearly $35 billion in collateralized debt obligations and
other mortgage-backed securities, and investors lost a combined $1.6 billion when the funds filed for
bankruptcy in July." If true, BSC will certainly be heavily sued. This, as much as the turn-down in the
US economy, lies behind the steep decline in BSC stock.
THREE WAYS TIGERSOFT SPOTS INSIDER TRADING
Insider selling puts pressure on a stock which we detect in several ways.
1) Most obvious is the failure of the stock to move up in a market that is lifting the DJI-30.
TigerSoft's Intermediate-Term Relative Strength (ITRS) Indicator had been negative for most of 2007.
That was the first sign of insider selling.
2) A second significant sign of insider selling comes from On Balance Volume. Tiger's measure
of aggressive selling and buying here is our unique On-Balance-Volume Percent. That gave tell-tale
readings below -.50 in early March.
3) The third tool we use is our creation, the TigerSoft Accumulation Index. It dropped below
-.25 in early August.
Insider-inspired selling was undeniable. A TigerSoft trader looking at this evidence could
reasonably have planned a short-selling campaign focusing on this stock. Using the automatic
Red Sell Signals to sell short at the next day's opening and buying when a Red arrow appeared
at the next day's opening would have gained that trader more than 93% for 2007..
-------------------------- BEAR STEARNS Chart using TigerSoft -------------------------------------------
ANOTHER WAY TO TRADE USING TIGERSOFT
On 7/17/2007, Tiger's Peerless Stock Market Timing Software gave a reversing major SELL
on
the general market. It is shown on the BSC chart below. The DJI immediately
fell 10% until
the
Fed intervened and cut interest rates. That Sell Signal on general market made us
search for
suitable
short sales. Normally, brokerages rise and fall with the general market quite
closely.
That
made BSC with its technical weakness a reasonable short sale. TigerSoft offers many
unique
tools.
In the chart below you can see where the "Opening Power Mvg.Avg." turned
up. That could
have
been used as a good place to cover the short sales in BSC. It proved a better spot
than
waiting
for the blue 50-day ma to be penetrated to the upside. The upside penetration of the
50-day
ma
did bring a brief rally as shorts took profits. But the decline back below it was
another good
point
to sell short. The fact that Tiger's Closing Power Indicator was declining offered
additional
proof
that the stock was vulnerable. It showed insitutions had a lot more stock to sell
than they
could
unload during the early hours of trading. That is what Closing Power detects.
--------------------- TIGER
BROKERAGE STOCKS' INDEX - 2007 -------------------------------
TigerSoft
plots indexes of groups of stocks. Below is the Tiger Brokerage Stock Index.
Trend breaks
in price are
significant. So is the dropping below its mvg.avg. by the Accumulation Index.
We watch such charts
regularly. You
can see the timeliness of the major Sells from Peerless in July.
When Peerless gives a
major Sell we look at the stocks considered "bearish" by the Tiger-Power-Ranker.
We also look at
the first stocks to make 12 month lows. See also
http://www.tigersoft.com/Tiger-Blogs/8-13-2007/index.htm