Our Core Investment Approach: The InsideTrack® Portfolios

We seek superior long-term returns emphasizing risk management and broad diversification in tailored strategies employing Global Key’s InsideTrack® portfolios.

A majority of active investment strategies underperform indexes. Few insights or information sources are unique, and even savvy managers face relentless competition. When a fund outperforms over time, distinguishing luck from skill can moreover remain difficult. Strong vested agendas have long sustained an industry reliant on high fees, although a decades-long shift toward passive indexing underscores a growing recognition that efficient markets do not necessarily justify the expenditures.

Approaching Wall Street as an ‘information food chain,’ the InsideTrack® portfolios began in 1996 by evaluating whether ‘smart money’ existed in trackable forms that could be mimicked to reduce risk and improve returns across diversified portfolios. Offered primarily to public company officers and directors, InsideTrack® attracted a unique brain trust for developing industry perspectives while merging practitioner perspectives with academic research to become increasingly quantitative over time. The development of a trading strategy is a continuous process with approaches that evolve, but a constant willingness to test and refine potential ‘smart money’ datasets has always led to the many original insights which drive what we do.

We seek to remain agnostic on near-term market direction and will generally avoid trend plays, macro predictions, market timing, sector opinions, or “gut” calls. Consistent within our approach has been a sustained effort put into developing and following signals around the complexities within insider trading disclosures. This is where we see the best performance opportunities in today’s markets.

Working closely with insiders has also spurred us to consider novel but important questions around insider trading not raised in the over 200 academic papers covering the topic. Behavioral factors matter. As one example, we were the first to apply a time series analysis toward insider trading, publishing academically to establish that insiders over time get worse at acquiring shares while improving at selling and that rarity of trading correlates positively to performance. We have multiple publications pending on a similarly basic level and actively incorporate our findings into our ‘smart money’ strategies.

Stay tuned!