How we rate an insider’s share purchase

Several hundred insiders disclose share dealings every month, and almost none of them mean anything. This is what we do with them — how a filing becomes a rating, what the six checks behind that rating actually test, and where the method stops.

What happens to a disclosure

1. Watch. We read the regulator’s own feed, never a third-party summary of it. The pipeline runs every fifteen minutes through the trading day.
2. Classify. Awards, vestings, option exercises, placings and disposals are pulled out. Only open-market purchases go further.
3. Triage. A fast first pass weighs each surviving buy against its context. Most filings stop here.
4. Analyse. What is left gets the long read, with the case against alongside the case for. Every piece of evidence must carry a working source link.
5. Rate. The six checks are applied and the result is a rating from significant down to routine, published with its reasoning.
6. Track. Every rated buy is followed from its disclosure-day close and scored against the index.

The six checks

1. Was it an open-market buy?
   They paid for the shares themselves on the open market. Not an option grant, a vesting, or an internal transfer.
2. Was it a senior insider?
   The buyer is a CEO, CFO, or a board member close to the business, not a junior name on the register.
3. Did they show real conviction?
   The amount is large relative to what they earn, so it reads as a real commitment rather than a token.
4. Was the timing their own call?
   Nothing mechanical explains the timing: no dividend reinvestment, no pre-arranged trading plan, no contractual or tax deadline.
5. Does the context hold up?
   Either there is news that makes the timing make sense, or nothing public argues against it. A buy in a quiet period can be the strongest kind.
6. Is the picture otherwise clean?
   Nothing serious points the other way: no other insiders selling at the same time, no open investigation, no sign the business is still getting worse.

The four ratings

Significant

All six checks clear. Deliberately hard to reach.

Noteworthy

Most of the picture holds up, but something is missing or ambiguous.

Minor

A real decision, but small, or by someone far enough from the business that it says little.

Routine

Disclosed, but not informative — the housekeeping that makes up most of what gets filed.

Where the filings come from

We read SEC EDGAR Form 4 filings, covering companies listed on NYSE & Nasdaq, filed by the people local rules call insiders — in their own format, never a third party’s summary of them, checked every fifteen minutes through the trading day.

Where the method stops

A rating describes how a purchase reads against six specific tests. It is not advice, not a price target, and carries no view on whether the shares are worth buying today. The checks are judgements and can be marked wrongly in either direction; the pipeline only sees what gets disclosed; and the checklist itself is adjusted as the record builds, so a filing’s rating can change after publication.

Information only, not investment advice.