Omaha, Neb., based Catalyst Funds has launched what it touts as “the first legal insider trading mutual fund."
The Catalyst Insider Long/Short Fund is looking to take advantage of legal insider trading by betting on stocks experiencing significant insider buying and selling short those that are subject to large clusters of insider selling, according to a press release.
According to the firm, the Securities and Exchange Commission requires that corporate insiders disclose all of their personal transactions in their own company stock on SEC Form 4 filings. Investors in the Catalyst Insider Long/Short Fund will get the opportunity to legally invest based on insider trading filings collected from the SEC.
David Miller is the portfolio manager of the new offering, which has a net annual operating expense of 175 basis points. Miller said that the firm has done a siginificant amount of research on the space and decided that insider trading has shown a significant amount of alpha.
"The focus on is on executives knowing more about their companies' worth than anybody outside," he said.
Miller also shared that he is currently prepping a long-only version of this offering to be launched within the next few months.
All told, Catalyst currently manages some $300 million in 11 mutual funds.