Methodology
Insider Activity Signal
Measures whether Form 4 transactions show unusual insider buying, selling, clustering, role concentration, or plan-driven activity.
What this score measures
| Area | Current state | Notes |
|---|---|---|
| Purpose | Measures whether Form 4 transactions show unusual insider buying, selling, clustering, role concentration, or plan-driven activity. | Research context |
| Methodology version | v0.1 | Versioned scoring model |
| Interpretation | Scores are analytical signals | Not investment ratings |
How it is calculated
Signal combines transaction direction, dollar size, officer/director role, cluster density, plan status, recency, and historical context.
| Area | Current state | Notes |
|---|---|---|
| Cluster density | 25% | Source-backed scoring input |
| Transaction direction and size | 25% | Source-backed scoring input |
| Insider role | 20% | Source-backed scoring input |
| 10b5-1 and derivative context | 15% | Source-backed scoring input |
| Recency | 15% | Source-backed scoring input |
Worked example
The scoring job reads recent insider transactions, counts them, preserves cluster context, and adjusts the score around a neutral baseline.
| Example component | Score effect | Source context |
|---|---|---|
| Acquisition transaction | Positive raw contribution | Open-market or reported acquisition context |
| Disposition transaction | Negative raw contribution | Reported sale or disposition context |
| 10b5-1 mention | 35% of normal transaction effect | Plan-related context reduces transaction weight |
| Driver input | Public label |
|---|---|
| Driver 1 | 3 Form 4 transactions |
| Driver 2 | 1 insider transaction cluster |
Recent Form 4 cluster with acquisition/disposition direction
The score uses transaction count and cluster context rather than public narrative claims until Form 4 parsing and source review are stronger.
Current examples
Examples show covered tickers and public driver labels used by this methodology. They are not a ranking table.
| Ticker | Coverage case | Public driver labels |
|---|---|---|
| MSTR - Strategy Inc | Issuer where Form 4 cadence and transaction clustering can affect the research view. | 3 Form 4 transactions; 1 insider transaction cluster |
| COIN - Coinbase Global | Operating exchange where executive, director, and plan-related transactions need separation. | 2 Form 4 transactions; 1 insider transaction cluster |
| HOOD - Robinhood Markets | Retail trading platform where Form 4 role and transaction direction are reviewed together. | 2 Form 4 transactions; 1 insider transaction cluster |
Score range interpretation
| Area | Current state | Notes |
|---|---|---|
| 0-24 | Low or routine activity. | Research-only framing |
| 25-49 | Monitor for repeated activity. | Research-only framing |
| 50-74 | Material insider-activity signal. | Research-only framing |
| 75-100 | High-conviction cluster requiring source explanation. | Research-only framing |
Limitations
- Form 4 coding is complex and must distinguish grants, exercises, sales, and derivative transactions.
- Cluster analysis requires clean issuer, role, and date normalization.
- The signal is descriptive research context, not investment advice.