NEW YORK ( Insider Monkey ) -- The insider trading arrests yesterday show how inside information can be funneled to hedge funds. The process makes hedge fund clients rich at the expense of unsophisticated ordinary investors.

Illegal insider trading is definitely profitable but relatively risky. It's possible to eliminate the risk but still profit from insider trading. Academic studies have shown this to hold true for the past 50 years and across the globe. Insider purchases beat index funds by more than 7 % per year when there are several insiders purchasing.

Two weeks ago we published the list of companies with at least three insiders buying. Six of the seven companies beat the index funds during the following week. Last week we published 6 more companies with insider purchases. Here is how those six stocks performed:

1. Scientific Games Corp ( SGMS): Scientific Games Corp went up by 2.6% between last Thursday's close and this Thursdayâ¿¿s close. S&P 500 ETF ( SPY) went up by 0.86% during the same time period.

2. Black Hills Corp ( BKH): We mentioned that we didn't like to pay a 3% premium for this electric utilities company. The stock went down by 0.3%, underperforming the market index by more than 1 percentage point.

3. World Heart Corp ( WHRT): This is another stock that underperformed the market index. It returned 0.5% during past week. But this is a very illiquid stock and we usually stay away from it.

4. Town Sports International Holdings Inc ( CLUB): We added this stock a month ago to Insider Monkey's hypothetical portfolio when it was trading at $3.01. This Thursday it closed at $3.71. The stock returned 1.9% during the past week and 23.2% during the past month.

5. Career Education Corp ( CECO): Career Education Corp went up by 1.1% during the past week, beating the market.

6. Raymond James Financial Inc ( RJF): We declined to imitate Raymond James insiders because the transactions didn't appear to contain any information at all. However, the stock returned more than 2.5%, beating the market.

Overall consensus criteria beat passive investing by 3-2 last week. The average return for this portfolio was 1.2% during the past week, 0.3 percentage points higher than the market return. Of course, this is just a very small sample and does not prove or disprove the credibility of monkeying insider purchases.

Insider Monkey, your source for free insider trading data, will share very recent academic studies with you, so that you can do your own research. We will keep providing weekly updates on stocks insiders buy like crazy, although it might be better to follow them in real-time if one is monkeying insider transactions. Here are the four stocks insiders were buying like crazy this past week:

If you liked this article you might like

10 Best-Performing Stocks in the Dow: Cramer's 'Mad Money' Recap (Thursday 8/3/17)

Expedia, Baozun, Scientific Games: 'Mad Money' Lightning Round

Scientific Games Bolts Higher

Scientific Games May Be Worth Playing Here

Here's Why Scientific Games (SGMS) Stock Is Soaring Today