Eaton Vance Floating-rate Stock Moved After An Insider Trade

Author: Benzinga Insights | December 22, 2020 11:42am

 

Saba Capital Management, L.P. filed a Form 4 with the SEC on Tuesday, December 22. The insider bought 31,759 shares of Eaton Vance Floating-Rate Income Trust (NYSE:EFT) at $13.26 on Friday, Dec 18, and bought 10,033 shares at $13.18 on Monday, Dec 21. After the transactions, the executive's stake in Eaton Vance Floating-rate Inc. movedto 5,872,416 shares. Eaton Vance Floating-Rate Income Trust was trading 0.1% higher from the previous closing price.

The Importance of Insider Transactions

Insider transactions shouldn't be used primarily to make an investing decision, however an insider transaction can be an important factor in the investing decision.

When an insider buys stock after an important sell off, that can indicate the insider's faith in the success of the organization. Henceforth, if the stock is bought at new highs, it might be because the insider feels that the stock is not overvalued. Insiders who sell stock at new lows could be anticipating some capitulation moment. If the insider sells at new highs, it could point to the intention to "take some profit" and "lock in a gain."

Transaction Codes To Focus On

Wall Street tends to focus on insider transactions which take place in the open market, viewed inside a Form 4 filing via codes P for purchase and S for sale. An open-market transaction means the insider went into the market of their own volition and made an active decision about the potential path for a company and its stock moving forward.

Transaction codes other than P or S are often viewed with less conviction as they are often not tied to a decision by the exec. As an example, transaction code C indicates the conversion of an option. Transaction code A indicates the insider may have been forced to sell shares in order to receive compensation the exec was promised upon being hired by a company.

Posted In: EFT