Who counts as an insider
For US filings, insiders are generally officers, directors and holders of more than 10 percent of a company's shares. They file a Form 4 when they trade, usually within two business days, so the public sees most insider activity quickly.
Why purchases are more informative than sales
An insider buying shares with their own money is spending on the company's prospects, which is a clearer statement than a sale. Sales have many ordinary causes: diversification, a home purchase, tax, or a plan set up in advance under SEC Rule 10b5-1.
How to read insider buying
- Size. A large purchase relative to the insider's holdings is more meaningful than a token one.
- Role. A chief executive or chief financial officer buying shares is often more relevant than a director receiving a small award.
- Clusters. Several insiders buying in a short window is more interesting than one purchase.
- Context. Check the price, the recent news and the company's own disclosures before drawing a conclusion.
Limits
Insider buying is a prompt to research, not a conclusion. Insiders can be wrong, and a purchase does not guarantee a return. Atradian shows insider buys inside smart money tracking, next to regime and news, so you can weigh them alongside everything else.