Simplify Insider Trading Reports
June 14, 2011
Insider trading activity is one of the first and most important checkpoints to consider when evaluating a company for investment. Successfully negotiating this checkpoint, I’m afraid, is also a matter of regular failure for many people.
Three years ago, shortly after launching grahamanalytics.com, I published more than one thousand summary reports for insider trading on the Venture Exchange. Frustrated with SEDI.ca reports, I asked my colleague, Ivan (Vanya) Shogin, to develop a procedure to simplify the mass of data into a more useful format. I didn’t care to see every single insider transaction in a six month period, for example. All I really wanted to know was, for a particular company’s insiders, how many shares were bought and sold, and how many options and warrants were issued and exercised. Were insiders net buyers or sellers of a stock and how much money were they making from trading in their own stock? Reading SEDI reports was painful on the eyes and very time consuming. In the end, it wasn’t worth the trouble.
I can think of one insider at a company I was watching who had traded his own stock more than 200 times in a six month period. My assignment was to create a procedure that would reduce these transactions into just two lines. Specifically, I wanted to know, for that period, how many shares did he buy, at what average cost, and for what total dollar value. Same for shares sold. Vanya came through in flying colours. What I got back was exactly what I’d asked for.
More recently, I was able to quickly (less than two minutes) summarize another senior officer’s selling of his own stock on the public market over the past two years to a total of more than 1.3 million shares. On the buy side, not one single share.
On a monthly basis, I had someone individually prepare and download more than one thousand SEDI.ca reports for insider trading… until SEDI called, that is. With legal advice, they decided that I had no right to provide this service and ‘requested’ me to remove these reports from my website, or pay them more than $15,000 annually for the privilege. I believe now as I believed then, that this information was in the public domain and that I was merely processing public information for improved presentation. Unwilling to fight, and absolutely unwilling to pay, I complied with their request, hoping that they would take the hint and adapt their own offering to simplify reports.
Three years later, I’m not hoping… nor waiting. I’m not going to publish the reports, still not eager to incur anyone’s wrath in the legal department. At the same time, it seems a shame that the investor community still has to wade through cumbersome reports that just don’t add much value to the equation. While the securities exchanges in Canada declare transparency as one of their key objectives, their insider trade reporting system does not answer the need.
I’ve asked Vanya, therefore, to publish his procedure here for all to download, free of charge. Now, you can prepare summary reports on your own, up to date, for any company, and for whatever period you’re interested in. This procedure only generates reports for Common Shares, Warrants, and Options.
The procedure was developed in VBA for Excel (By the way, I place Vanya in the top ten, worldwide, for automating Excel using VBA procedures. He’s been doing it for me full-time for the past six years.). VBA means that it’s a higher level macro. In turn, this means that you will have to Enable the macro each time you open the downloaded file. Your computer’s security system may not want you to do this for your own protection. The procedure is safe, but it’s your call. If you’re not comfortable with macros, this procedure will not work for you.
Here it is in five easy steps.
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Create a new folder on your computer called “Insider Trading”. (15 seconds)
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To make the procedure work for you, you’ll need first to prepare a SEDI.ca insider trading report. (If you need a tutorial demonstration on how to do this click here.) (60 seconds)
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Once you’ve got that down, and have prepared a sample SEDI report, while still on SEDI.ca, click on File at the top left of your screen. In the drop-down menu, click on Save Page As. The default type is Web Page, HTML only and that’s the one you want. You can give the page a new name (e.g.: Company X), but leave the .htm extension alone. Choose your new Insider Trading folder as the destination and Save. (15 seconds)
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Click here for the procedure. In some browsers you’ll be able to open the file directly in Excel (others, like Internet Explorer, not). It’s just as well to save the file to your Insider Trading folder. (10 seconds)
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Open the procedure file. Click on the Install button to the centre left of the worksheet. Then, click on the Insider Transaction Procedure toolbar button that now appears in the centre of the worksheet (For those working on later versions of Excel: after opening the Insider Trading.xls, allow the Macros and ActiveX; when you click on the Install Insider Trading Procedure button in the middle of the spreadsheet nothing may appear to happen; click on the Add-In tab on the Menu bar at the top right of the screen and then click on the Insider Trading label; you should immediately be prompted for the SEDI.htm file. For those working in the Apple environment, any suggestions on how to navigate through the security fence would be much appreciated. I’ll update when we figure that one out.). When you’re asked to select a SEDI report, click OK and double click on the downloaded SEDI insider trading report already saved in your new directory. You’ll be asked where you want the final report saved. Just place it in the same directory. It will automatically be named by date and company. (20 seconds)
Total elapsed time: 2 minutes.
The base summary report will be prepared before your eyes in Excel, with secondary sheets showing all the backup data, one insider per sheet. You will also find this report prepared in .htm format, saved under the company name in the same directory. Now you’re in a position to file or publish this report as you see fit.
Let me know what you think (see the comment box, below)… and send your thanks to Vanya. This was his baby.
Best,
Kevin Graham