Methodology
Everything in the score is listed here with its weight. If a number on a signal page cannot be traced to this page, that is a bug and we want to hear about it.
Data sources
Insider transactions come from SEC EDGAR: Form 4 and amended Form 4/A filings, with Forms 3 and 5 stored for completeness. We poll EDGAR’s current-filings feed every two minutes, fetch each filing’s complete submission file and parse the ownershipDocument XML inside it. The raw file is kept, so a parsing improvement can be applied to history. Company names, tickers and SIC codes come from the SEC’s company tickers file and submissions API; the ticker in the filing itself wins when they disagree.
Daily closes come from a free end-of-day feed, refreshed after the US close for every company with a signal in the last two years. They are used for the 52-week context, the price chart and forward returns. Nothing is intraday.
Latency
A filing appears on EDGAR at the moment the SEC accepts it, during the SEC’s hours (6 a.m. to 10 p.m. Eastern on business days). We usually have it scored within two to five minutes. An insider has two business days after a trade to file, so the trade date is typically one or two days before the filing date; both are shown everywhere.
What a signal is
One insider’s open-market transactions in one filing: code P (purchase) rows become a buy signal, code S (sale) rows a sell signal. Rows of the same side are summed; a filing with both gives two signals. Grants and awards (A), option exercises (M), tax withholding (F), gifts (G), dispositions to the issuer (D), conversions (C) and the rest are stored and shown on the filing pages but never scored, because they say nothing about what the insider thinks the stock is worth. Derivative rows are shown and not scored.
Conviction score for buys
The sum of the components below, capped at 100 and floored at 0. Each component is stored on the signal with the reason it was given.
| Component | Points | Rule |
|---|---|---|
| Role | 8 to 25 | CEO 25, CFO 22, president or COO 20, chair 20, other officer 15, director 15, 10% owner 12, other 8. Several roles take the highest. |
| Size in dollars | 0 to 25 | $25k gives 5, $100k 10, $500k 18, $1M and above 25, linear between the steps. Under $25k, nothing. |
| Size relative to holdings | 0 to 10 | A first purchase (no prior holdings) 8. Holdings up 50% or more 10, 20% or more 6, 5% or more 3. |
| Price context | 0 to 10 | Close within 10% of the 52-week low 10. Otherwise 30% or more below the 52-week high 8, 15% or more 4. |
| Cluster | 0 to 15 | Three or more distinct insiders buying the same stock within 14 days 15, two 8. Counted at scoring time and again when later filings land. |
| Repeat | 0 or 5 | The same insider’s second or later buy within 90 days 5. |
| Track record | -5 to 10 | The insider’s median 6-month excess return after past buys, three or more with prices. Above 10% adds 10, above 0 adds 5, below 0 subtracts 5. Unknown adds nothing. |
| 10b5-1 plan | -15 | A trade under a pre-arranged plan was decided months ago; it subtracts 15. |
| Small top-up | -5 | A buy under 1% of holdings subtracts 5. |
| Fund without a seat | -5 | A 10% owner who is neither an officer nor a director subtracts 5. |
Warning score for sells
Insiders sell for many reasons that have nothing to do with the stock, so the warning score is deliberately harder to earn.
| Component | Points | Rule |
|---|---|---|
| Role | 8 to 25 | As for buys. |
| Size in dollars | 0 to 25 | As for buys. |
| Share of holdings sold | 0 to 20 | 50% or more 20, 25% or more 10, 10% or more 5. |
| Cluster selling | 0 to 15 | Three or more insiders selling within 14 days 15, two 8. |
| Role exit | 10 | The filing notes the insider has left the role. |
| 10b5-1 plan | -20 | Scheduled sales are the norm for executives; they subtract 20. |
| Exercise and sell | -15 | An option exercise (code M) in the same filing: the sale funds the exercise or the tax. |
Tiers
80 and up is strong, 60 to 79 notable, 40 to 59 moderate, below 40 weak. Lists default to notable and up. The tier is fixed at scoring time and never rewritten, so the backtest cannot flatter itself.
Track records
An insider’s track record is the median of their past buy signals’ 6-month excess returns, counted only when three or more have six months of prices. Strong is above 10%, positive above 0, negative below 0. Track records are computed per insider across every company they file at. Sells are not used, because sells are mostly liquidity.
Forward and excess returns
Entry is the first close after the filing reached EDGAR. The return at a horizon is the close one, three or six calendar months later divided by the entry, minus one. Excess subtracts the S&P 500 (SPY) over the same two dates. The backtest groups these by side and tier and shows the median, the mean, the hit rate and n for every cell.
Congressional trades
Members of Congress disclose trades under the STOCK Act in periodic transaction reports, due within 30 days of learning of a trade and 45 days of the trade. House reports come from the Clerk of the House’s yearly disclosure index and its PDFs, which we read row by row when they carry a text layer; reports filed on paper are scans and are recorded with a link only. Senate reports come from the Senate’s electronic financial disclosure system, one web page per report. Both are checked every hour. Filers are matched to members through the public legislators dataset; an unmatched filer keeps a page marked as such.
There is no conviction score for congressional trades. The forms carry no role at the company, no holdings before and after, and no trading-plan flag, so the inputs the insider score rests on do not exist. Amounts are the ranges filed, never a point value, and sorting by amount uses the midpoint of the range. Trades are listed by filing date or amount. Outcomes are measured from the first close on or after the day the report was filed, the first day anyone outside could act, against the S&P 500, at one, three and six months, for common stock with a ticker only, and every figure is shown with its sample size. A member’s track record is the median 6-month excess return after their disclosed purchases, counted from three settled purchases. None of it is advice.
Limitations
- The weights were set by hand from the literature on insider trading (cluster buys, officer buys, purchases near lows) and will be fit to our own backtest once there is a year of history. Until then they are an informed starting point.
- Market capitalisation and liquidity are not in the score yet. A $200k buy in a micro-cap is a bigger deal, and a bigger risk, than the same buy in a mega-cap.
- The price feed is end of day. The 52-week context uses the last close before the trade date, not the trade price.
- Forward returns need prices through the horizon, so the newest signals are not in the longer horizons, and stocks that left the exchange long ago may be missing prices.
- Form 4 is self-reported. Late filings, amendments and footnotes are handled as best we can; a 4/A replaces the original.
- A cell with n below 30 is shown with a mark. Read it as an anecdote.
Not advice
InsiderTell is decision support built from public filings. We never say buy or sell, and a high score is not a recommendation. Outcomes of comparable past filings describe the past. Read the filing, check the context, decide yourself, and size your risk.
Not investment advice. Scores and forward returns are decision support built from public SEC filings and past prices; they describe what happened after comparable filings, not what will happen after this one. Do your own research and size your risk.