Murstein Alvin: insider trades

Chief executive, Officer at Medallion Financial Corp. 8 open-market purchases and 8 sales not made under a pre-set plan, reported from December 5, 2011 to March 2, 2022.

Would copying Murstein Alvin’s purchases have beaten the S&P 500?

Too few purchases to judge. Only 5 purchases have 12 months of prices after the report; we judge insiders once they have 20. The figures below can swing a long way on a handful of trades. Buying each purchase the day after it was reported, an equal amount each, and holding it 12 months or until they reported a sale would have turned $10,000 on March 2, 2015 into $5,586 by November 2, 2026, −4.9% a year. The copy held shares only 24% of the time, so the fair comparison is the S&P 500 on those same days with Treasury bills otherwise: $13,092, +2.3% a year (the S&P 500 held throughout made $43,309, +13.4% a year). Beta against the index was 0.20. Twelve months after each report, the average purchase was −50.8% against the S&P 500 (median −64.3%), and 20% beat it. Measured from the trade date, the insider’s own timing, the average was −50.2%. After their sales, the shares moved −12.3% against the index over 12 months on average (a negative figure means selling was the right call); 100% trailed it.

With 296 insiders tested, some will look skilled or unskilled by chance alone: when we replaced each insider’s stocks with random companies bought on the same days, about 5.7 cleared the bar ahead and 23.3 behind. One record on its own proves little.

Copying Murstein AlvinS&P 500, same days investedS&P 500, held throughout $10,000 copying Murstein Alvin’s open-market purchases from March 2, 2015, before costs and taxes, marked weekly. Each purchase gets the same starting stake, bought at the close of the first trading day after the report and sold 12 months later or the day after a reported sale of that stock; uninvested money earns the Treasury bill rate. “Same days invested” holds the S&P 500 only on the days the copy held shares, Treasury bills otherwise.

Return a year, copying: −4.9%
S&P 500, same days invested: +2.3% (held throughout +13.4%)
Time in shares: 24%
Sharpe ratio (S&P 500): −0.17 (0.68)
Biggest drop (S&P 500): −72% (−34%)
Market sensitivity (beta): 0.20
Purchases copied: 5

Trade by trade

Murstein Alvin: trades against the S&P 500 afterwards
Measured	Trades counted	Average vs S&P 500	Median	Went the right way	Years	t-statistic	p-value	Evidence
Purchases, 3 months after the report	5	−15.5%	−14.1%	20%	3	—	—	Not enough years
Purchases, 6 months after the report	5	−38.6%	−51.9%	0%	3	—	—	Not enough years
Purchases, 12 months after the report	5	−50.8%	−64.3%	20%	3	—	—	Not enough years
Purchases, 12 months after the trade	5	−50.2%	−63.5%	20%	3	—	—	Not enough years
Sales, 3 months after the report	7	−14.1%	−15.7%	86%	2	—	—	Not enough years
Sales, 12 months after the report	7	−12.3%	−11.0%	100%	2	—	—	Not enough years
Sales, 12 months after the trade	7	−13.4%	−9.6%	100%	2	—	—	Not enough years

“Average vs S&P 500” is the stock’s return including dividends minus the index’s over the same dates, from the close on the first trading day after the report, or from the close on the trade date. Only windows that have finished are counted. For sales, a negative figure means the stock lagged after it was sold, so selling was the right call (green). “Went the right way” is the share of purchases that beat the index, or of sales that trailed it. The t-statistic uses one average per year of reports, because one person’s trades bunch into the same stock and weeks, and needs trades in at least four different years; the p-value comes from the t distribution with that number of years (with four years, a t of 2 has p = 0.14). “Some evidence” means p under 5%, “strong evidence” p under 1% over at least six years.

Companies traded

Company	Title on the latest filing	Purchases	Sales	First report	Latest report
Medallion Financial Corp MFIN	See Remarks	8	8	December 5, 2011	March 2, 2022

Trades and what followed

Moves are against the S&P 500; green means the trade went the insider’s way.

Reported	Traded	Company	Trade	Value	3 months after report	12 months after report	12 months after trade
March 2, 2022	March 1, 2022	MFIN	Purchase	$83,600	+0.5%	+9.0%	+11.5%
August 12, 2019	August 8, 2019	MFIN	Purchase	$47,400	not yet	not yet	not yet
May 25, 2017	May 24, 2017	MFIN	Purchase	$657,937,500	not yet	not yet	not yet
December 12, 2016	December 8, 2016	MFIN	Sale	$361,200	not yet	not yet	not yet
December 12, 2016	December 8, 2016	MFIN	Purchase	$364,000	not yet	not yet	not yet
August 22, 2016	August 18, 2016	MFIN	Purchase	$26,050	−39.0%	−64.2%	−63.5%
March 16, 2016	March 15, 2016	MFIN	Purchase	$45,400	−20.6%	−92.7%	−95.7%
March 2, 2016	February 29, 2016	MFIN	Purchase	$48,240	−14.1%	−98.0%	−95.3%
February 27, 2015	February 26, 2015	MFIN	Purchase	$25,550	−4.3%	−8.2%	−7.9%
June 13, 2014	June 11, 2014	MFIN	Sale	$264,100	+4.1%	−27.3%	−34.5%
December 19, 2011	December 15, 2011	MFIN	Sale	$71,410	−15.2%	−6.9%	−9.5%
December 15, 2011	December 13, 2011	MFIN	Sale	$34,948	−17.5%	−8.1%	−8.3%
December 13, 2011	December 9, 2011	MFIN	Sale	$19,890	−20.7%	−10.8%	−13.6%
December 9, 2011	December 7, 2011	MFIN	Sale	$26,465	−18.9%	−11.2%	−9.8%
December 7, 2011	December 5, 2011	MFIN	Sale	$284,636	−15.7%	−11.1%	−9.6%
December 5, 2011	December 1, 2011	MFIN	Sale	$204,941	−14.3%	−11.0%	−8.4%

Open-market purchases and sales of at least $10,000 in companies we cover, from SEC Form 4 filings; sales made under a pre-set Rule 10b5-1 plan are not shown. “Not yet” means the window has not finished or the share price was under $5 at entry. These are the shares’ moves after each trade: they say nothing about why Murstein Alvin traded and do not suggest the use of non-public information. How every insider compares · the insider trading backtest.