What is a Form 4?
Officers, directors and anyone owning more than 10% of a public company are “insiders” under Section 16 of the Securities Exchange Act. When they buy or sell the company's stock, they must file a Form 4 with the SEC within two business days. Each filing lists the date, the number of shares, the price, and how many shares the insider owns afterward.
We download every Form 4 from SEC EDGAR each night for companies in the S&P 500 and read the transaction tables directly.
Which trades we count
- Purchases (code P): open-market buys with the insider's own money. These are the most informative trades. We ignore purchases under $10K.
- Sales (code S): open-market sales. Insiders sell for many reasons (taxes, diversification, a house), so sales are a weaker signal than purchases.
- Left out: stock awards, option exercises, tax withholding and gifts. They are compensation events, not decisions to buy or sell.
Rule 10b5-1 plans
A 10b5-1 plan lets an insider schedule trades in advance, often months ahead. Trades made under a plan say little about the insider's current view, so we label them “Plan” and treat them separately in our summaries.
Cluster buys
A cluster buy is 3 or more different insiders making open-market purchases of the same stock within 14 days. Academic research has repeatedly found that purchases by several insiders at once are followed by stronger returns than single purchases.
Insider Score
For every past purchase, we take the closing price on the first trading day on or after the filing date. That is the first day an outside investor could have acted. We then measure the return over the next 90 calendar days and subtract the S&P 500's return (SPY) over the same period.
- Each filing counts once, even if the insider split one order across many lines.
- An insider needs at least 2 measured purchases to receive a score.
- The average excess return is shrunk toward zero for small samples:
n × average ÷ (n + 3). Two lucky trades can't outrank a long, steady record. - The result is mapped to 0–100, where 50 means market-like. Above 70 is a strong record; below 43 is below average.
Scores describe the past. They are not a forecast and not a recommendation.
Our Picks
Every stock with at least one open-market purchase filed in the last 45 days receives a score out of 100 from seven components: insider conviction (30 points), insider track record (15), valuation (15), profitability (10), volume (10), entry price (10), and news and events (10). The picks page explains each one. Picks are rule-based and impersonal, are the same for every reader, and are not advice about your situation.
Stocks to Watch
Each night we screen every profitable company we cover and score it out of 100 on seven factors: valuation against its own last three fiscal years (20 points), latest quarterly results (20), three-year revenue and EPS growth (20), a recent pullback within a longer uptrend (15), news sentiment (10), government and policy headlines (5), and insider buying (10). The five highest scores, at most two per sector, appear on the Stocks to Watch page with an automatically written overview. Earnings and revenue history come from the companies' own SEC filings (XBRL financial data). P/E at each fiscal year-end is the closing price on that date divided by that year's diluted EPS.
News, events and policy headlines
We list a company's 8-K filings from SEC EDGAR. These are the official notices companies file for material events like earnings, executive changes, acquisitions or restatements. We also collect recent headlines from the GDELT news index. Headline tone is scored by counting clearly positive and negative words. It is a rough signal, and it can misread sarcasm or context. Headlines about tariffs, regulators, Congress, sanctions, subsidies or investigations are marked “Policy” so you can judge political and regulatory exposure yourself.
Valuation, profit and volume
P/E ratio, market value, profit margin and revenue growth come from Yahoo Finance and refresh weekly. Sector medians are calculated across the companies we track. “Volume vs. 50-day” compares the last five sessions' average trading volume with the prior 50 sessions. “Paper profit” is the gain or loss on insiders' tracked purchases at the latest closing price. It ignores later sales and is not their actual realized profit.
Prices and timing
Prices are daily closes adjusted for splits and dividends. The “Since” column compares the latest close with the price the insider paid or received. Data refreshes once per night, so very recent filings may appear the next morning.
Corrections
Filings are sometimes amended (Form 4/A) or contain errors. If you spot a mistake, write to [email protected] and we'll fix it.