An insider trade is not automatically an information signal.

Public research brief

The useful question is not whether an insider traded. It is whether that trade broke a pattern.

Cohen, Malloy and Pomorski separate routine insiders from opportunistic ones using their past trading calendars. The intuition is straightforward: recurring transactions may reflect predictable liquidity needs, while irregular trades may contain more information.

• The paper reports 82 basis points per month of value-weighted abnormal returns from opportunistic trades.
• Routine trades contribute little predictive information in the authors' sample.
• This is a classic study revisited with later data, not a newly published discovery.

We tested the classification in a later US sample. The paid analysis explains what happened to the spread and what we can reasonably infer from it.

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