Insider trading is alive and well.
I’m sure that’s not surprising. But here are two things you may not know.
- Thanks to a loophole in the law, many of these insider trades are done totally legally.
- YOU can profit from this trading activity.
I know this because I used to be a Wall Street insider myself.
And trust me: The stories I could tell would make your skin crawl.
But the most important thing to remember is that the big banks don’t like to take big risks.
When they put down tens of millions – even billions – on a single trade, it usually means they know something we don’t.
And today, I’m going to prove it to you… but I’m also going to show you how you can turn this knowledge into cash in hand.
In fact, I’m going to give you the next big stock that has Wall Street going all in.
Because when you follow along with the big, institutional money, you can start seeing gains like 40% in a single morning, 88% in four days, and 209% in two days – like my readers have been.
But if you ignore what I’m about to show you, your best bet is to pray for 8% gains a year from some mutual fund, just like everyone else.
So let’s get started.
Wall Street’s Biggest Loophole
When something big happens at a publicly traded company, it has to notify investors.
But it doesn’t have to notify them before the event takes place.
It doesn’t have to notify them as the event takes place.
According to law, it can disclose significant events up to four business days after they occur.
Here’s an example of how this might help insiders.
Let’s say that on Monday, Company X lands a huge government contract that will double its profits every year for three years. According to the law, they’ll have to tell investors about this by Friday.
But in the meantime, insiders can snap up huge stakes in their own company. When the public finds out at the end of the week, the stock skyrockets, and the insiders make off with millions.
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I call it the “8-K loophole” because an 8-K is the form companies fill out to disclose major events like these.
How common is this, and how much does it help?
Researchers at Harvard and Columbia teamed up to analyze over 15,000 8-K submissions and found that during the “trading gap” between an event occurring and the 8-K being filed, there is irrefutable evidence that insiders are taking a nice cut for themselves.
Here’s my favorite quote from the study:
“We also show that, when they engage in such purchases, insiders are correct about the directional impact of the 8-K filing more often than not – and that the probability that this finding is the product of random chance is virtually zero.”
That’s fancy academic speak for “this is no coincidence.”
This is pure math, conducted by the top universities in the nation, across more than 15,000 cases.
It’s happening all the time.
And it’s not just ivory tower professors catching on to this. Financial journalists nationwide are reporting on widespread insider trading. Check out these headlines:
“A Legal Loophole Lets Executives Trade on Insider Information, and It Seems to Be Rampant”
– Business Insider
“Insiders Beat Market Before Event Disclosure: Study”
– Wall Street Journal
“How Senators May Have Avoided Insider Trading Charges”
And the 8-K trading gap is just one of several loopholes in the law. Other loopholes allow for insider trading to occur for a lot longer than four business days in advance.
The point is there is legal insider activity going on all over Wall Street…
And more importantly, YOU can put some of that money in your pocket, where it belongs.
Follow the Money
Follow the money – without those three little words, I wouldn’t have been able to bank $5 million before my 30th birthday. Without those three little words, I couldn’t have built a reputation for showing my readers repeated double- and triple-digit gains in a short amount of time.
Let’s take a look at some examples of how this works.
In August of 2019, I saw that 10 random investors – completely out of the blue – each made identical trades.
These 10 investors matched four and a half days of Tapestry’s normal trading volume in just 32 minutes.
These were some big bets.
And as I’ve said, the institutions placing big bets don’t like to take big risks. These 10 investors likely knew something the rest of us didn’t.
So I followed along.
Seven days later, I was up 300%.
Here’s another example.
In June of 2019, I saw two identical trades on Blackstone Group. These guys caused a volume spike worth 22 days of normal trading volume in a minute.
Whatever they knew, I wanted to be in on it.
By following along, I collected a 700% windfall in just two days.
Let’s check out a more recent example.
On January 29, 2020, I saw some mysterious trading action on ArcelorMittal. I recommended a trade to my readers to capitalize on it. Somebody knew something we didn’t, and I wasn’t about to let them have all the fun.
A week later, anyone who followed my recommendation was up a mind-blowing 543%.
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Let’s see one more. I want you to see how fast this can work.
On July 6, 2020, I saw nearly four days’ worthof trading volume pour into First Solar. Within minutes of the market open, I suggested that my readers follow the money and jump in on this trade.
By noon, that trade had more than tripled in value – we saw 243% gains!
Those are just a handful of the successes I’ve seen by following the money. I’m recommending new trades every single week.
In fact, I’m going to recommend another stock right now.
It’s a company that I’m seeing lots of institutions pour cash into.
Let’s follow the money…
Hiding in Plain Sight
This company has all the makings of a perfect “follow the money” pick.
The big institutions absolutely can’t get enough of this stock, but the markets have been downright lukewarm towards it. That tells me Wall Street knows something we don’t.
I’m talking about Microsoft (MSFT).
It may seem like an obvious choice. It may seem too big to grow much more.
Folks were saying the same thing in the summer of 2018, when Microsoft was trading for $100 a share. But by the summer of 2020, its price had doubled.
So let’s get real.
In Q2 2020, Microsoft crushed earnings expectations. Revenue jumped 13% from the same period the year prior, and earnings per share beat analysts’ prediction by 9%.
Business processes segment up 6%. Intelligent cloud division up 17%. Personal computing sales up 14%. The list goes on.
But the stock fell 2.5% after hours.
And this is no isolated incident. Since the lows during the coronavirus, Microsoft’s recovery hasn’t been as triumphant as its cloud competitor Amazon or its personal computing competitor Apple.
In the four months following the late March lows, Amazon shot up 80%.
But Microsoft only saw a 49% recovery in the same time.
There could be a handful of reasons for this, including the concerns that Microsoft could face slowing growth in its Azure cloud business due to Amazon Web Services. And many worry that with a second wave, many businesses could pull back on IT spending to help control their budget.
And yet, the big institutions seem to have something different in mind.
Amazon shows up in the top 10 holdings of about one in five hedge funds. For Apple, that number is closer to one in six.
Microsoft is much more common, showing up in one in four hedge funds’ top 10 holdings. Plus, it has the greatest overall institutional ownership of the three.
The big banks know something the markets don’t. Here’s the thing about a second wave – businesses still have to run and will have to do so remotely, which leads me to believe that Microsoft will still be an integral part of the day to day.
Truthfully, we could be looking at a stay-home economy for three months, six months, or even longer. And as long as we stay at home – remote work will remain the norm. And the need for technology to support this style of work will remain – meaning Microsoft will continue to see a boost from the current climate.
The stock has sold off from recent highs, but I feel that this sell-off creates a buying opportunity on this heavy-hitting tech stock.
So I’m not buying into the worries that other investors seem to have. I’m calling Microsoft a buy now, and I’ll be looking to buy even more on any pullback I see.
My Favorite Way to Follow the Money
This strategy has been generating money hand over fist since the recession of 2008… and now, I’m finally sharing my secret.
Investors in today’s economic climate need every advantage they can get, and I’ve never seen a strategy more powerful than this.
Click here for the full story and the next three plays I have my eye on.
We’ll talk again soon,
Founder, 1450 Club