Insider Transactions (Form 4)
When a company's executives, directors or shareholders owning more than 10% buy or sell the company's stock, they must disclose the trade on Form 4 within two business days. This refers to legal, publicly disclosed trades, not the illegal practice of trading on inside information.
How to read it
Buys are more informative than sells. Executives sell for many reasons (paying taxes, diversifying, buying a house), but there is usually only one reason to buy on the open market with their own money: they think the stock is cheap.
Several executives buying within a short window is a far stronger signal than any single trade.
Separate open-market buys and sells from option exercises and the vesting of stock awards. The latter are part of compensation and do not express a view.
Common pitfalls
- Many sales are executed automatically under pre-arranged 10b5-1 plans and have nothing to do with the executive's current judgment.
On FinDog
The Insider Transactions card on each stock page summarizes open-market buys and sells by executives and directors over the past 90 days, and the full list page shows the date, price and dollar amount of every trade. Data comes from Form 4.
See it on a stock page →Related terms
- Form 13FInstitutional investors managing more than $100 million must file Form 13F with the SEC within 45 days after each quarter ends, disclosing their long positions in U.S. stocks. It is a public window into what well-known funds are doing.
- Share BuybackA buyback is a company using cash to repurchase its own shares on the market and retire them. With fewer shares outstanding, earnings per share and each share's claim on the company both go up. It is the other way, besides dividends, of returning capital to shareholders.