How to read a Form 4 insider filing
Form 4 is the SEC filing an officer, director or 10% owner must submit within two business days of buying or selling their own company's stock. The key fields are the transaction code (P = open-market purchase, S = sale, A = grant, M = option exercise, F = tax withholding), the price, the number of shares and the shares owned afterwards. Only open-market purchases (code P) are a clean signal; most other codes are compensation mechanics.
What do the transaction codes mean?
P is an open-market or private purchase paid with the insider's own money. S is a sale. A is a grant or award from the company. M is an exercise or conversion of a derivative such as an option. F is shares withheld to pay taxes on a vesting award. G is a gift, W a transfer by will, C a conversion, D a disposition to the issuer (including tenders). J and I are catch-all codes.
Fundocap groups them into three classes: high conviction (P, C and exercise-and-hold M/X), liquidity (S, D and exercise cash-outs) and noise (A, F, G, W, J, I). The insider feed hides noise unless you ask for it.
Why does a purchase matter more than a sale?
Insiders sell for many reasons that say nothing about the company — diversification, taxes, a house, a vesting schedule. They buy on the open market for one reason: they expect the stock to be worth more. Academic work since Seyhun (1986) finds that purchases, especially by several insiders at once and in smaller companies, carry a measurable forward return; sales do not.
What is a 10b5-1 plan and why is it flagged?
A Rule 10b5-1 plan is a pre-scheduled trading plan adopted when the insider has no material non-public information. Trades executed under a plan are mechanical, so they carry less signal. Since 2023 Form 4 has a checkbox for plan trades; Fundocap shows a 10b5-1 badge on those rows.
What is a cluster buy?
Two or more different insiders buying the same company's stock on the open market within a short window — Fundocap uses 7 days. A cluster is the strongest single pattern in insider data because independent people reached the same conclusion with their own money. The cluster buys page lists the current ones.
What else should I check on a Form 4?
The filing lag (a late filing past the two-business-day deadline is shown in red), the size of the purchase relative to what the insider already owned (a doubling matters more than a 1% top-up), the role (CEO and CFO purchases are rarer than director purchases) and the price paid versus today's price.
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Frequently Asked Questions
Where do Form 4 filings come from?
From SEC EDGAR. Fundocap rebuilds its insider dataset daily from the SEC's Form 4 feed and keeps one year of buys.
Do option exercises count as buying?
Only when the shares are kept. An exercise followed by a sale in the same filing is a cash-out and is classified as liquidity.
13F data shows quarter-end positions, is delayed by up to 45 days and covers only long positions in US-listed securities; short positions, most derivatives and non-US assets are not reported.