Ancora would prefer to invest when management is buying, as insiders are usually a strong indicator of value and/or future growth in a business. Insiders are typically value investors and already incentivized through stock options, restricted stock or family stock ownership.  When senior managers or directors add meaningfully to already sizable holdings, it can be an indicator of market mispricing or near-term positive trends.

Insider selling can serve as a warning signal in certain cases, and the circumstances around insider sales are considered on a case-by-case basis. Management may sell for diversification purposes or to fund a sizable personal financial commitment. However, there are instances in which management is selling in order to take advantage of market mispricing when valuations are too high or growth is beginning to stall. Ancora examines past share price performance after management selling in a particular company, and the reputation and motivations of the management team, prior to making a decision based on sales by management.

Finally, we want to invest along side management teams that have a significant ownership stake in the business with a long-term view to realizing value. We do not condone the use of lavish stock option packages and would prefer to invest with management teams that have put personal capital at risk. Alignment of incentives is key in ensuring that management is making the best possible decision for all shareholders.