As of the latest SEC filings, insiders at Target Corp. (NYSE:TGT) have decreased their position in the stock by -20.01% over the past 6 months.. Insiders now own 0.10% of total outstanding shares.
Trading can be done both illegally and legally. Illegal insider trading is when an “insider”, as defined by the Securities and Exchange Commission (SEC), uses information or materials not yet available to the public in order to buy or sell a commodity. Anyone who has this insider information can be convicted of insider trading. This includes employees, family, friends, and brokers, not just upper management, as is the common misconception. The SEC is extremely strict with illegal insiders due to the fact that the activity undermines confidence of investors and undermines the integrity of the financial markets. Anyone who provides or sells this insider information to outside parties can be found liable as well.
However, insider trading isn’t always illegal. In fact, insiders buy and sell their own company’s stock every day, though the trading is restricted. The SEC says that an “insider” is anyone who owns at least a 10% stake in a company’s stock. Insiders who make trades are required to file all of their transactions within two business days of the initial transaction date. Information about legal insider trading is extremely valuable to investors. After all, if insiders are buying stock in their own company, they probably know something that a normal investor does not. Due to the fact that insiders are prevented from trading stock within a six-month period, it can be assumed that they are buying their own shares because they are confident that their company will be a top performer over a long period of time. One of the greatest investors of all time, Peter Lynch, is quoted as saying: “insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.”
University of Michigan professor and noted insider trading researcher, Nejat Seyhun, discovered that when insiders bought shares of their own companies, the stocks outperformed the total market by 8.9% over the following year while when they sold shares, the stock underperformed 5.4% over the same period.
Read more at The Post