How to check insider selling

Every insider trade in a US public company is disclosed within two business days, free, on a government website. Here is how to actually look.

The walkthrough

1. Find the company. Go to EDGAR company search and enter the ticker or company name.

2. Filter to Form 4. In the filing type box, enter 4. You will get every insider transaction, newest first.

3. Open one. EDGAR renders them as readable tables. See what is a Form 4 for what each column means.

4. Look at the pattern, not the trade. One sale is almost never the story.

There is also a live feed of every Form 4 filed right now, across all companies: EDGAR latest Form 4 filings. Watching that for ten minutes teaches you more about what normal looks like than any article will.

The four things that separate signal from noise

1. Transaction code. S is an open-market sale — a decision. M followed by S is an option exercise-and-sell, which is how a large share of executive compensation is routinely converted to cash. Conflating the two is the single most common error.

2. Proportion, not quantity. “Sold 200,000 shares” is meaningless alone. The “shares owned following transaction” column gives you the denominator. Selling 80% of a position is an event. Selling 3% is a Tuesday.

3. Whether a 10b5-1 plan is disclosed. Pre-arranged trading plans are set up in advance and disclosed in the footnotes. Sales under a long-standing plan carry little information. Sales with no plan, at unusual size, do.

4. Clustering. Several insiders selling in the same window is a different signal from one person selling. So is the reverse — multiple directors buying on the open market, which is rarer and harder to explain away.

Insider buying is the more interesting filing

Executives sell for a hundred reasons. They buy for approximately one.

Open-market purchases (P) by directors and officers — especially a first purchase after years of nothing, or several insiders buying in the same window — are a much smaller, much less-covered dataset than selling. Most coverage of insider activity is about sales, which means the buying side is comparatively unexamined.

What none of this establishes

That someone traded on material non-public information. That is a legal conclusion requiring evidence of what they knew and when. A Form 4 establishes what was traded and when, and nothing more.

Anyone telling you a filing proves intent is selling you something.

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