The price impacts of informed investors

We empirically identify a group of stock-exchange accounts that profit from 11 years of earnings surprises. Their trading behavior is consistent with privately informed trading, yet they have negative and temporary price impacts. We then empirically identify a second group of accounts that have positive and permanent price impacts. The trading behavior of the second group is more consistent with trading on public information, and they trade the wrong way before earnings surprises. The behavior of both account groups contrasts with models that associate permanent price impact with privately informed trading. • Two informed groups. Toronto stock exchange data identify (i) slow, earnings-informed accounts and (ii) rapid five-second traders. • Stealth profits, no footprint. Earnings-informed trade ≈ 20 % of volume, net C$3 bn, yet leave zero (even negative) lasting impact. • Public-info traders shift prices. Five-second traders’ market orders create durable moves while often filling earnings-informed limit orders. • How they stay hidden. Informed traders lean on passive orders and high noise periods to cloak activity. • Rethink “impact = private info.” Permanent impact mainly tags public-information flow; price-impact metrics misfire for private intel.