Fund managers with hidden Facebook ties to executives earn 16% a year extra

Concealed Facebook friendships between mutual fund managers and company officers were linked to abnormal returns of 135 basis points a month, over 16% a year, concentrated around earnings and merger news.

Illustration of a fund manager and a corporate executive secretly connected by a glowing thread through a social network web.
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Mutual fund managers who are secretly connected to company executives on Facebook earn striking returns on those companies’ stocks. Holdings tied to such hidden connections were linked to abnormal returns averaging 135 basis points a month, more than 16% a year.

The study is by Manuel Ammann of the University of St. Gallen, Alexander Cochardt and Stephan Heller, affiliated with Harvard and St. Gallen, and Lauren Cohen of Harvard. It was published online in the Journal of Financial Economics on February 3, 2026, for the journal’s April 2026 issue. The authors describe the evidence as suggestive of insider trading.

Mapping 35 million friendships

The researchers identified concealed relationships using information from more than 100,000 Facebook profiles and their 35 million friends. They focused on connections between fund managers and officers of public firms, covering the universe of mutual funds and public companies.

These hidden ties turned out to be the most powerful predictor of future stock returns among the network characteristics previously documented in research, and their predictive power has grown over time, up to the present day.

Timing, not familiarity

The authors rule out two obvious explanations. The premium does not come from managers selecting connected firms for other reasons, or from simply favoring companies they know. Instead, managers show specific timing ability in deciding when to hold, or avoid, stocks of firms whose officers they are secretly linked to.

The value of the information rises the more concealed the connection is, and it is concentrated around earnings announcements and mergers and acquisitions.

The premium is absent in index funds, where managers cannot pick stocks or time trades. The results hold across industries, investment styles, time periods and types of firms.

Study Details:

  • Title: Hidden alpha
  • Authors: Manuel Ammann, Alexander Cochardt, Lauren Cohen, Stephan Heller
  • Journal: Journal of Financial Economics
  • Publication Date: February 3, 2026
  • DOI: 10.1016/j.jfineco.2025.104225