Even though Mark Cuban, owner of the Dallas Mavericks, was
recently acquitted of insider trading charges there is still good
reason to believe many of the "insiders" have exclusive
For the average investor they will likely never come across
such information and if they do it is probably bad investment
That is where the Guggenheim Insider Sentiment ETF (NYSE:
) comes into play.
The ETF tracks the Sabrient Insider Sentiment Index and is
rebalanced every quarter. By using a quantitative methodology the
index picks stocks from the major U.S. exchanges based on insider
buying trends and increases in earnings estimates by Wall Street
The 100 stocks chosen from the universe based on the index
criteria will have an equal weighting after each rebalance.
While the ETF is not a pure play on insider buying, it does
provide exposure to stocks that have recently been purchased by
insiders that have earnings increasing. The combination has
proven to be successful since the ETF began trading in 2006.
A gain of 73 percent since inception has been able to beat out
a gain of 29 percent from the S&P 500 during the same time
The ETF is fairly diverse based on sector allocation. The
financials make up 21 percent, followed by consumer discretionary
at 18 percent, and IT at 15 percent. Because the ETF is equal
weighted, each quarter every stock begins with an allocation of
Throughout the quarter the top performers will increase their
percentage. Currently the top holdings are Midstates Petroleum
), Ferro Corp (NYSE:
), and iGate Corp (NASDAQ:
With a net expense ratio of 0.65 percent and the clear
outperformance the ETF has been able to deliver over the last
seven years it obvious NFO is an investment to be considered.
The track record for insider buying has been strong because
even thought the insider should not be basing decisions on
"inside" information it happens all the time.
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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