As part of its ongoing crackdown on illegal insider trading at hedge fund firms, the U.S. Securities and Exchange Commission recently accused hedge fund manager Leon G. Cooperman and his firm, Omega Advisors Inc., of insider trading. According to the top U.S. securities regulator, Mr. Cooperman and his firm earned around $4 million when his well-known hedge fund Omega Advisors invested in Atlas Pipeline Partners six years ago based confidential information about the sale of a gas processing facility of which other stock market participants were not aware of.

Clearly, most individuals associate the term “insider trading” with loud insider trading cases such as the one discussed above, but a clear distinction between the “legal” and “illegal” kind of insider trading needs to be made. While illegal insider trading is definitely more profitable than the legal kind of insider trading, past research concludes that outsiders can earn abnormal returns by simply mimicking the legal kind of insider transactions. In the following insider trading article, Insider Monkey will present a list of several noteworthy insider transactions reported with the SEC in the past two days.

Through extensive research that covered the portfolios of several hundred large investors between 1999 and 2012, we determined that following the small-cap stocks that large money managers are collectively bullish on, can generate monthly returns nearly 1.0 percentage points above the market (see the details here).

Board Member of Clinical-Stage Vaccine Company Buys Shares After Massive Plunge

One member of Novavax Inc. (NASDAQ:NVAX)’s boardroom purchased a sizable chunk of shares this week. Gail K. Boudreaux, who joined the company’s Board of Directors in June 2015, doubled her ownership stake to exactly 200,000 shares. The freshly-bought 100,000 shares were acquired at prices ranging from $1.44 to $1.45 per share.

The insider buying comes shortly after the clinical-stage vaccine company focused on the development of recombinant nanoparticle vaccines and adjuvants announced that its lead product candidate, a vaccine for a respiratory virus known as RSV-F, did not meet its primary endpoint. As a result, Novavax Inc. (NASDAQ:NVAX)’s stock plunged by around 80%, although it has been recovering in the last couple of days. One explanation for the massive plunge due disappointing trial data stems from the fact that the company issued $300 million in convertible debt due in 2023 earlier this year to fund its operations. Specifically, the company said that the maturity date of the notes “falls well beyond our expectations” for the timing of the vaccine’s commercial launch and that anticipated profits from the vaccine would enable Novavax to repay the debt. And although the clinical-stage company has not abandoned the development of the vaccine just yet, the timing of the possible launch of the vaccine looks quite uncertain. Baker Bros. Advisors, founded by Julian and Felix Baker, owned 2.38 million shares of Novavax Inc. (NASDAQ:NVAX) at the end of the June quarter.

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The next two pages of this insider trading article will focus around another set of notable insider transactions reported with the SEC earlier this week.