Jerry Sullivan, award-winning fund manager at American Century Investments, has made the most of an investment tip he got as an analyst at Fidelity Investments from famous investor Peter Lynch in the 1980s.
“On a sheet of rules for investing that he handed out, the first rule on when a stock was ripe to buy was nonoption-based insider buying. That always stuck with me, Finance Investment and I always paid attention to it,” Sullivan told Reuters in a phone interview.
Lynch is Fidelity’s most famous fund manager and ran its flagship Magellan fund from 1977 to 1990, helping to generate returns more than five times that of the Standard & Poor’s 500-stock index.
Last March, the U.S. Securities and Exchange Commission charged Lynch with improperly accepting gifts paid for by Wall Street brokers. He settled the charges, agreeing to pay a $20,000 fine, and expressed regret for his actions.
The $410 million American Century Fundamental Equity Fund that Sullivan co-manages won research firm Lipper Inc’s award in the large-cap core category for the three-year period through end-2007.
Sullivan, 47, said he has applied the insider-buying strategy successfully in the past few years in the case of banking firm JPMorgan Chase & Co (JPM.N: Quote, Profile, Research), student lender Sallie Mae (SLM.N: Quote, Profile, Research) and beverages caps maker Crown Holdings Inc (CCK.N: Quote, Profile, Research).
He said about 400-500 insider transactions are reported every day and he looks at them all Finance Investment. Every week or two, his fund buys at least one stock in which insiders traded, Sullivan said.
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