What an insider is and where to see their purchases

What is an insider?

An insider is someone “inside” a US-listed company who, for that reason, must report to the SEC every time they buy or sell its shares. The rule, Section 16 of the Securities Exchange Act, covers three groups: board members, officers (the CEO, the CFO and other senior roles) and any person or entity holding more than 10% of the shares.

Source: SEC interpretations: Exchange Act Section 16 and related rules and forms

What they report and when

They use three forms: Form 3 when they become insiders, Form 4 every time their holdings change (within 2 business days) and Form 5 once a year, for whatever did not go on a Form 4. The one that matters for tracking them is Form 4: it states the date, the number of shares, the price and the type of transaction.

Source: Insider transactions and Forms 3, 4 and 5 (SEC, PDF)

Not every transaction is a purchase

A Form 4 can report an open-market purchase (code P), a sale (S), shares received as compensation (A), an option exercise (M) or shares withheld to pay taxes (F). Only the open-market purchase is the insider's own money put in by choice. Sales have many reasons; besides, many are made under pre-arranged automatic plans (Rule 10b5-1), and the form says so.

Is being an insider the same as illegal insider trading?

No. An insider buying or selling shares of their own company is legal as long as they report it and do not trade on material information the public does not yet have. That last part is what is illegal. That is why the data is useful: it is a disclosed transaction, with a name, a role and a date.

Where to see insider purchases

The official source is EDGAR, the SEC's system, where every Form 4 is published minutes after it is filed. At GestorLens we read those forms several times an hour and show, by company, the open-market purchases of the last 30 days: how many insiders bought, how much and in what role. 10% owners are shown separately, because they are usually funds rather than people from the company.

Source: Search filings on EDGAR (SEC)

Why purchases get more attention than sales

A person sells shares in their company for many reasons unrelated to their view of the business: paying taxes, buying a house, spreading their wealth, following a plan set a year earlier. There are fewer reasons to buy on the market with one's own money. That is why academic studies have found more information in purchases than in sales: in Jeng, Metrick and Zeckhauser (2003), insider purchases earned, on average, above-normal returns while sales did not. This describes averages over many cases: it does not say what will happen to any particular stock, and many insider purchases were followed by falls.

Source: Jeng, Metrick and Zeckhauser (2003), Review of Economics and Statistics

What to look at in a purchase

Five facts change the reading. The role: the chief financial officer does not weigh the same as a board member who joined last month. The amount against what the person already held: adding 2% to a large holding is not the same as tripling it. Whether it is the first purchase in years or one more in a monthly programme. Whether several people bought within a few days. And whether the holding is direct or through a company or a trust. None of these is an opinion: they are in the form. Each row here shows them separately so they can be read without opening the document, and the link to the Form 4 sits next to it.

What these lists leave out

For an “insider purchase” to be what the name says, several things the form also calls an acquisition are excluded: shares the company awards as pay, purchases through discounted employee plans, option exercises and trades in other securities (bonds, preferred shares, units). Sales made to pay taxes are flagged separately. ADRs of foreign issuers, which report under different rules, are not shown either, nor are trades with out-of-range prices, which are almost always data-entry errors. Shareholders with more than 10% who hold no role in the company go in a separate list: they are usually funds, and their purchases follow a different logic.

Insiders in other countries

Every market has its own regime. In the European Union, the market abuse regulation requires managers and persons closely associated with them to notify their trades within three business days; in Spain the CNMV publishes them. In the United Kingdom they are disclosed through the regulatory news service. In Argentina, the CNV requires directors and statutory auditors to report holdings and changes. Deadlines, thresholds and formats differ from one country to another, so the data are not comparable row by row. This site shows only what is reported to the US SEC on Form 4.