Why cluster buys get attention
Insiders sell for many reasons: taxes, diversification, a house, a planned schedule. They generally buy for one reason, which is that they expect the shares to be worth more. When several insiders reach that conclusion at the same time, it suggests a shared view inside the company rather than one person's circumstances.
Academic research on insider trading has generally found that purchases carry more information than sales, and that purchases by multiple insiders tend to be more informative than isolated ones. That doesn't make any single cluster a sure thing.
How InsiderPrint defines a cluster
We count a cluster when at least three different insiders make open-market purchases (code P) of at least $10K each within 14 days. Grants, option exercises and tiny purchases are excluded. Clusters that include the CEO or CFO are marked, since those executives usually see the most.
How to use them
Treat a cluster buy as a reason to research a company, not a reason to buy it. Check what insiders paid compared with today's price, whether the company recently reported results or news, and whether the buyers have a good record with past purchases. Our Scorecard shows how past cluster buys performed.