The Insider Advantage | The Davenport Insider Buying Fund

May, 2026

Corporate insiders possess an information advantage that no analyst model can fully replicate. Open-market purchases represent a deliberate, discretionary commitment of personal capital. More than five decades of peer-reviewed finance research has documented that these purchases predict statistically significant abnormal returns. The strength of the signal varies meaningfully by who buys, how much they commit, and whether others buy alongside them. The findings below represent the academic foundation for the Davenport Insider Buying Fund (DBUYX) strategy.

What the Academic Record Shows

Opportunistic vs. Routine Trades

Cohen, Malloy & Pomorski (2012) show that opportunistic trades, defined as those outside an insider’s normal pattern, earn significantly higher risk-adjusted returns than routine trades, forming the backbone of the DBUYX screening process.

Translating Research into a Disciplined Investment Process

The Davenport Insider Buying Fund (DBUYX) was designed to translate decades of peer-reviewed research into a systematic, investible framework. The strategy emphasizes the highest-quality insider signals, specifically those most strongly associated with positive abnormal returns in the academic literature. Each potential holding is evaluated through a multi-step qualitative and quantitative screening process that prioritizes opportunistic insider activity, seniority of the purchasing insider, and the number of independent insiders buying concurrently. Signals are then stress-tested against fundamental criteria such as: limiting exposure to momentum-driven names, excessive debt, and rich valuations. Then deeper portfolio analysis determines admittance to the Fund.

Examples of Fund Holdings*

Cluster Purchase

  • Multiple executives made initial open-market purchases in September 2025 as the stock traded near multi-year lows — a textbook cluster buy signal
  • Insider conviction was reinforced by additional open-market purchases in December 2025, at higher prices, signaling sustained confidence

CEO Purchase

  • CEO Gary Dickerson committed approximately $7M in an open-market purchase in April 2025 — the first insider buy at Applied Materials in nearly three years
  • The purchase came amid tariff-driven sector weakness, representing a high-conviction, discretionary buy at a cyclical trough

Sources: 1Jeng, Metrick & Zeckhauser (2003), “Patterns of Insider Trading Around Earnings Announcements”. 2Cohen, Malloy & Pomorski (2012), “Decoding Inside Information”. 3Lorie & Niederhoffer (1968), “Predictability of Stock Market Prices”. 4Cziraki & Gider (2021), “The Dollar Profits to Insider Trading”.

Important Disclosures: *The holdings identified and described do not represent all of the holdings purchased, sold, or recommended. The reader should not assume that an investment in the portfolio companies identified was or will be profitable. The statements and opinions expressed in this article are those of the authors as of the date of the article, are subject to rapid change as economic and market conditions dictate, and do not necessarily represent the views of Davenport & Company LLC. This article does not constitute investment advice, is not predictive of future performance, and should not be construed as an offer to sell or a solicitation to buy any security or make an offer where otherwise unlawful. Investing in securities carries risk including the possible loss of principal. Individual circumstances vary. This information has been compiled from sources believed to be reliable; however, there is no guarantee of accuracy or completeness. Diversification and asset allocation does not ensure a profit or guarantee protection against a loss. Performance shown is historical and is no guarantee of future results.
Investors should consider the Fund’s investment objectives, risks, charges, and expenses carefully before investing. The Fund’s prospectus contains this and other important information, should be read carefully before investing or sending money, and may be obtained from your Financial Advisor, www.investdavenport.com, or by calling (800) 846-6666.
The Dow Jones Industrial Average® (The Dow®), is a price-weighted measure of 30 U.S. blue-chip companies. The index covers all industries except transportation and utilities. An investor cannot invest in an index and its returns are not indicative of the performance of any specific investment.
Risk Considerations: The fund may not achieve its objective and/or you could lose money on your investment in the fund. Stock markets and investments in individual stocks are volatile and can decline significantly in response to market, foreign securities, small company, exchange traded fund, investment style and management risks. Please see the prospectus for further information on these and other risk considerations.
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