THE VTU-INSIDERS PORTFOLIO CONSTRUCTION
Posted On Tuesday, January 5, 2010 at at 3:25 PM by Denis Ouellet, CFACorporate insiders have a great advantage over other investors: they know their company better and they know what’s happening in real time. Insider transactions, by themselves, are not a reason to buy or sell a stock, however. They only alert me to do some fundamental work to see if there is an opportunity to make money.
I have set up a personal portfolio to do just that. I monitor insider transactions in the US and Canada. When significant transactions pop up, I check the fundamentals of the company. If the fundamentals justify action, I then check some technical factors to make sure that I am not going too much against the wind.
Each position, long or short, of about $5000 will be held as long as the technical and/or fundamental factors justify it.
For those who are curious of what I do, I will post my transactions after they are completed. Please, note that this is a real personal portfolio and I will post it here your info only as it is not meant to be buy or sell recommendations.Please read the disclaimer.
For the record, here is how it works:
- I monitor insider transactions (as often as practical for me).
- I check for trends in transactions, either one individual is making numerous same way transactions over a period or time, or many insiders act the same way at the same time.
- Interesting buy/sell candidates are then investigated in a fundamental way. If the fundamentals justify it, the stock is placed on my watch list.
- Before transacting, I look at some technical factors to make sure that “the trend is not totally unfriendly”.
- The position is reversed when either the technicals or the fundamentals reverse.



