Tyson Insiders Aren't Too Chicken to Buy

A Form 4 filed with the Securities and Exchange Commission has disclosed that Kevin McNamara, a member of the board of directors at Tyson Foods (TSN), directly purchased 3,000 shares of stock on May 13 at an average price of $24.55 per share. This came about a week after another board member bought 4,000 shares.

Studies show that stocks bought by at least one insider slightly outperform the market, and there is a somewhat stronger effect for stocks bought by multiple insiders. This makes sense to us -- economic theory suggests that it is rational to increase company-specific risk in this way only if the expected returns are high enough to offset the benefits of diversification. The insider optimism is particularly interesting because Tyson has risen 23% year to date....459 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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