I've gotten some mixed feedback and am a bit confused on the following scenario:
Suppose I'm researching Public Company A. I find someone at Private Company B that is a customer of A who provides ballpark figures of how much sales B does with A and how that has changed over some annual / quarterly time frame. A doesn't publicly disclose any of these specific sales with its customers. Is that considered insider info on A?
Does the scenario change if both A and B are public companies and neither publicly discloses its business with each other?
Note I'm looking at this as an individual investor / for stock pitch purposes so looking for the purely legal requirements and not any internal compliance policies.
Channel checks are mostly non-public, non-material information. Aka noise.
did you just stumble across yipit?
I wish I had the budget for alt data lol
Here is simplified legal framework: investors are expected to do their own supporting research, and information isn't soley restricted to what PublicCo publicizes - as it's an unreasonable standard for investors to restrict themselves to relying on PublicCo information exclusivity.
Say you are diligencing SHOPIFY and talk to customer that only provides $1-2K revenue on an $9B FY24 revenue basis. This is a non-material, non-important customer that has little predictive capability over the rest of the business. Any information received is perfectly fine to evaluate while continuing to trade stock.
Say you are diligencing NVIDIA and you're college buddies with CFO of META who is a 10%+ customer for annual revenue. If CFO states that META is discontinuing GPU purchases (say moving to AMD) this is material non-public information. You likely need to consult with general counsel and place this stock on no-trade list.
Lawyers will debate threshold of materiallity, but above are two extreme examples which would fall into opposing categories
Wish it was always that clear :-)
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