What are informative insider trades?
The insider buys and sells HedgeFollow considers likely to reflect what the insider thinks of the stock: real purchases and sales that aren't part of a trading plan, aren't to pay tax, aren't duplicated or over-reported, and actually change the insider's holdings.
Most insider transactions say little about a company's prospects: awards, option exercises, gifts, shares withheld for tax, sales scheduled months ahead in a 10b5-1 plan. Even among plain buys and sells, some are just shares moving between an insider's own accounts or family members, or the same trade reported by several people.
A trade counts as informative when all of these hold:
- It's a buy or a sell.
- It isn't part of a 10b5-1 trading plan.
- It isn't redundant or over-reported.
- It isn't to cover tax.
- It changes the insider's total holdings.
Even informative sales usually outnumber informative buys, since insiders receive much of their stock as pay and sell some over time. That's why insider buys generally get more attention.
Related pages: Insider Trading 101: informative trades Insider Trading Tracker