It's Quiet...Too Quiet...Buy!

HERE'S ONE CLEVER WAY TO arbitrage takeover candidates in today's hot merger market: Look for an absence of trading by corporate insiders. Not wanting to draw the unwanted attention of federal regulators, insiders usually refrain from buying or selling their company stock while a deal is cooking.

Recent example: Chase Manhattan, due to be acquired by Chemical Banking. According to Fort Lauderdale (Fla.) research firm CDA Investment Technologies, the last time a Chase officer made a major sale--90,000 shares by John Scicutella, an executive vice-president who left to join Prudential--was in the spring.

What are the best prospects? CDA has come up with several by finding companies whose insider moves have stopped and whose stock is up, as if to signal a pending deal. Only Riverwood, a paperboard maker that went public in 1992 and is 81.5% owned by Manville, admits it is exploring going on the block. Shelby Williams, which makes seating, says it has had no offers. Hibernia, busy gobbling up smaller banks around New Orleans, attributes its lull in insider activity to an end of execs' routine portfolio adjustments.

CDA readily admits its method is hardly infallible. Insider activity may cease for a number of personal reasons unrelated to the deal mill.