LESSON 1 / 4 · 7 MIN
Insiders: Form 4
Read transaction codes and tell meaningful buys from routine sales.
Directors, executives and owners of more than 10% must report their trades in the company's shares to the SEC on a Form 4, generally within two business days. Each line carries a code.
| Code | What it is | Signal? |
|---|---|---|
| P | Open-market purchase with own money | Yes — the strongest one |
| S | Open-market sale | Weak — many reasons to sell |
| M | Exercise of options | No — compensation |
| A | Grant or award | No |
| F | Shares withheld to pay taxes | No |
| G | Gift | No |
Key idea
Executives sell for a hundred reasons — a house, taxes, diversifying. They buy with their own money for basically one: they think the stock is cheap. That is why a few purchases (P) say more than hundreds of sales (S).
Tip
Many sales are made under pre-arranged 10b5-1 plans, decided months in advance. The filing indicates it, usually in a footnote. Planned sales say even less.
On the site · /insiders
Open /insiders, filter by 'Purchases' and look at who bought, how much and in which company.
Open it on the site →Check yourself
The CFO buys $2M of stock with own money (code P). The CEO sells $5M under a 10b5-1 plan (code S). Which says more?