Every time a director, officer, or 10% owner of a US public company buys or sells stock, they have to tell the SEC about it within two business days. The disclosure arrives as a Form 4, and it is one of the most information-dense public documents in finance: who traded, what they traded, when, at what price, and how much they still own afterwards.
It is also, in its raw form, a miserable read. Here is the short version of what matters.
The three questions a Form 4 answers
Who? The reporting person, and their relationship to the company: director, officer (with the title), or a holder of more than 10% of the stock. A CEO's purchase and a passive fund crossing a threshold are very different signals filed on the same form.
What? Each line of the filing is one transaction: the security, the date, a one-letter transaction code, the share count, the price, and the shares owned after. Non-derivative lines are plain stock; derivative lines are options, RSUs, warrants, and everything else that converts into stock.
How much conviction? The "shares owned following transaction" column tells you what the trade did to the insider's overall position. Selling 5,000 shares means one thing when 2 million remain, and another when it empties the account.
The transaction codes that matter
The one-letter code is the single most important field on the form:
| Code | What it means | Signal |
|---|---|---|
| P | Open-market purchase | The strongest positive signal on the form. The insider chose to spend their own money at the market price |
| S | Open-market sale | The classic negative signal, but the noisiest: people sell for taxes, houses, and divorces, not only for doubt |
| M | Option exercise | Usually neutral by itself; watch what happens to the shares next |
| F | Shares withheld for taxes | Routine. Not a decision to sell |
| A | Grant or award | Compensation, not conviction |
| G | Gift | Estate planning, charity. Rarely a signal |
| C | Conversion of a derivative | Mechanical |
| J | "Other" | The junk drawer. Read the footnotes |
A useful rule: P is a decision, S is a fact, everything else is plumbing. Insiders have exactly one reason to buy on the open market and many reasons to sell, which is why open-market purchases carry so much more weight than sales in every study of insider returns.
What separates a signal from noise
Cluster buying. One insider buying is interesting. Three insiders buying the same stock in the same week is a pattern. The academic literature is consistent on this: purchases by multiple insiders predict returns better than any single trade.
Size relative to the insider. A $50,000 purchase by a director who owns $40 million of stock is a rounding error. The same purchase doubling a CFO's position is a statement.
10b5-1 plans. Many sales (and some purchases) happen under pre-arranged trading plans, marked on the form. A scheduled sale that was committed to months ago says little about what the insider thinks today.
The footnotes. The most misleading-looking filings usually explain themselves in the footnotes: ADS ratios, trusts, family accounts, plan sales. If a number looks impossible, the explanation is almost always down there.
Or skip the paperwork
Reading one Form 4 is easy enough. Reading the several hundred that arrive on a typical weekday is not a job for a human, which is the reason this site exists: we ingest every filing as it lands, score each transaction by code, size, and context, and rank what is actually worth a look.
The activity feed is the live stream, signals ranks the net buying and selling pressure, and every company page carries the complete insider history so a single trade can be read against its background.