Despite being just two-years-old with a tiny $300 million in AUM, Catalyst has caught the attention of InvestmentNews
reporter Jeff Benjamin. He profiles Catalyst Capital Advisors
] Catalyst Insider Buying Fund
and its PM David Miller.
“There are lots of studies showing alpha coming from insider buying,” he said, citing one study that compared insider-buying activity to stock performance from 1975 through 1994.
“If we start to see significant selling, we get out immediately, because 65% of the outperformance comes in the first six months.”
Miller has steered the fund to a more than 22 percent gain in the two years since Catalyst launch the fund. Over that time the S&P 500 is up 17.2 percent.
Obviously, Miller attributes this performance to his use of insider buying and selling.
The fund tracks the buying and selling activity by insiders of various companies. Miller found that if three or more insiders bought shares totaling 10,000 during a quarter, that stock's performance beat the S&P by an average of 11.5 percent over the next 12 months.
Miller's fund holds only 35 stocks and concentrates on U.S. companies with market caps of $8 billion and up. The portfolio weighs 21 percent in financial and consumer stocks, 10 percent in industrial, 11 percent in health care and 14 percent in energy. The fund has grown to less than $6 million, but Benjamin maintains that the returns are more important than the assets.
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