The Legal Kind

When we talk about tracking insider trading, we're referring to legal, reported transactions by company insiders:

Who are insiders?

• CEOs and C-suite executives
• Board members and directors
• Major shareholders (10%+ ownership)
• Senior management team

Why track them? These are the people inside the company who:

• Know the financials intimately
• Understand the business trajectory
• See opportunities and risks before the public
• Have the most information about future prospects

The Left Panel: Buy and Sell Activity

Shows a clear visualization of insider transactions over the last 3 months.

What you'll see:

• Names of insiders
• Their positions (CEO, Director, etc.)
• Action taken (Bought/Sold)
• Percentage change in their holdings
• Dollar value of transaction
• Price at which they bought/sold
• Date of transaction

1. Buy vs. Sell Activity

What to look for:

• Are insiders buying or selling?
• How many buyers vs. sellers?
• What's the total dollar volume?

Bullish signal: Multiple insiders buying, especially in large amounts

Bearish signal: Multiple insiders selling, especially senior leadership

2. Position Change Percentage

How much did they increase or decrease their holdings?

My significance threshold:

• 10%+ increase or decrease: Starting to be significant
• 15%+ increase: Definitely significant
• 25%+ increase: Very significant

Why it matters: A CEO increasing their position by 25% shows strong personal conviction in the company's future.

3. Dollar Amount

The actual dollar value of the transaction.

My significance threshold:

• $1 million+: Significant transaction
• $5 million+: Very significant
• $10 million+: Major conviction signal
• $25 million+: Exceptional conviction

Example from video: Stephen Hemsley (CEO) bought $25 million worth of stock—a massive buy showing extreme confidence.

4. Purchase/Sale Price

The price at which the insider bought or sold.

Why this is critical:

• Insiders' buy prices become reference points
• If current price is near their buy price = at smart money levels
• If current price is below their buy price = you're getting a better deal than insiders

Example from video:

• Stephen Hemsley bought at $289
• Current stock price: $291
• Analysis: Stock is trading near CEO's buy price—good sign

5. Transaction Date

When did the transaction occur?

Time windows to monitor:

• 0-3 months: Most relevant and timely
• 3-6 months: Still relevant but less immediate
• 6+ months: Historical context

Focus on recent activity for the most actionable signals.

Insider Buying Signals

There's typically ONE main reason insiders buy: They believe the stock is undervalued and expect it to go up

Why insider buying is so powerful: When an insider uses their own money to buy stock, especially in large amounts, it shows:

• Strong conviction in the company's future
• Belief the stock is undervalued
• Confidence in upcoming results or developments
• Alignment with shareholders

Key Insight: Insider buying, especially large purchases, is one of the most bullish signals you can get. They're putting their own money where their mouth is.

Insider Selling: More Nuanced

Many reasons insiders sell:

• Diversification: Not keeping all wealth in one stock
• Estate planning: Tax or financial planning needs
• Personal expenses: Buying homes, paying bills, etc.
• Pre-scheduled sales: 10b5-1 plans
• Lack of confidence: Actually bearish on the stock

The challenge: It's hard to know which reason applies, so insider selling is less predictive than buying.

When to worry about selling:

• Multiple insiders selling simultaneously
• Very large sales (liquidating major positions)
• Sales by key leadership (CEO, CFO)
• No other insiders buying

Small Sell Transaction

The data:

• Position: CEO
• Action: Decreased by 5%
• Value: $179,000
• Price: ~$305
• Date: June 10th

Analysis: ❓ Below my significance threshold ($1M+)
❓ Small percentage decrease (5%)
❓ Could be routine diversification
➡️ Not a major concern

Major Buy Transaction

The data:

• Insider: Stephen Hemsley (CEO)
• Action: Increased by 15%
• Value: $25 million
• Price: $289
• Date: Recent

Analysis: ✓ WAY above significance threshold ($25M!)
✓ Above 15% increase threshold
✓ CEO using own money to buy
✓ Current price ($291) near his buy price
➡️ VERY bullish signal

Why this matters: A CEO buying $25 million of their own company's stock shows exceptional conviction that the stock is undervalued and has significant upside potential.

Additional Buy

The data:

• Insider: Kristen Gill
• Action: 3,000 shares increase
• Value: ~$1 million
• Price: $271
• Date: May 15th

Analysis: ✓ Meets $1M threshold
✓ Bought at $271 (current ~$291)
✓ Stock is up since her purchase
➡️ Positive signal

Summary Dashboard View

Last 0-3 months:

• Sells: $179,000 (insignificant)
• Buys: ~$30 million total (5 buy transactions)
• Net: Heavily bullish

Last 3-6 months: Can check for additional historical context and patterns.

Step 1: Check the Overall Picture

Look at the infographic summary:

• More buying than selling?
• What's the net dollar flow?
• How many buyers vs. sellers?

Step 2: Examine Significant Transactions

Focus on transactions that meet significance thresholds:

• $1 million+ dollar value
• 15%+ position changes
• Senior leadership (CEO, CFO)

Step 3: Analyze the Timing

0-3 months window (most important):

• Any red flags? (Major selling)
• Any bullish signals? (Significant buying)

3-6 months window:

• Look for patterns
• Confirm or contradict recent activity

Step 4: Compare to Current Price

Critical analysis:

• Where did insiders buy?
• Where is the stock now?
• Can you buy near or below insider prices?

Step 5: Integrate with Other Metrics

Combine insider activity with:

• Valuation (P/E ratios, intrinsic value)
• Institutional sentiment
• Technical analysis
• Fundamental health

Scenario 1: CEO Buying Large Amount

Signal: 🟢 Very Bullish

Characteristics:

• Senior leadership (CEO, CFO)
• $5 million+ purchase
• 15%+ position increase

Action: Strong buy signal, especially if combined with good fundamentals

Scenario 2: Multiple Insiders Buying

Signal: 🟢 Bullish

Characteristics:

• 3+ insiders buying
• Various positions/levels
• Totaling $5 million+

Action: Consensus among insiders = high confidence signal

Scenario 3: Small Routine Selling

Signal: 🟡 Neutral

Characteristics:

• < $1 million sales
• One or two insiders
• Small percentage of holdings

Action: Likely routine diversification, not concerning

Scenario 4: Major Selling by Leadership

Signal: 🔴 Bearish

Characteristics:

• CEO/CFO selling large amounts
• $10 million+ in sales
• Multiple executives selling

Action: Investigate immediately, potential red flag

Scenario 5: No Activity

Signal: 🟡 Neutral

Characteristics:

• No significant buys or sells
• Only routine small transactions

Action: No signal either way, look to other metrics

What Makes Me Bullish

Requirements:

1. Net buying activity in 0-3 month window
2. At least $1 million in total insider buying
3. Preferably $5-10 million+ for high conviction
4. Senior leadership participation (CEO, CFO buying)
5. 15%+ position increases by key insiders

Ideal scenario: CEO buys $10 million+, increasing position by 20%+, at prices near or above current levels.

What Makes Me Concerned

Red flags:

1. Net selling activity in 0-3 month window
2. Multiple executives selling simultaneously
3. Large sales ($5 million+) by leadership
4. No buying to offset the selling

Major red flag: CEO or CFO selling 25%+ of their position in large dollar amounts.

For Value Investors

Use insider buying to: ✓ Confirm undervalued thesis
✓ Validate margin of safety
✓ Gain conviction in contrarian positions
✓ Identify when insiders see the value you see

Perfect scenario: Stock appears undervalued, AND insiders are buying aggressively.

For Growth Investors

Use insider buying to: ✓ Confirm growth trajectory
✓ Validate management's confidence
✓ Identify acceleration points
✓ Separate real growth from hype

Perfect scenario: Company showing strong growth, AND insiders are buying despite already-high prices.

For All Investors

Insider buying provides:

• High-conviction confirmation signal
• Price benchmarks (their buy prices)
• Red flag detection (unusual selling)
• Alignment check (management's money where their mouth is)

1. Insiders know best—They see financials and business trajectory before anyone else
2. Buying is more significant than selling—One main reason to buy (bullish), many reasons to sell
3. $1 million+ threshold—Focus on significant transactions that required real conviction
4. 15%+ position changes matter—Shows meaningful change in insider confidence
5. CEO/CFO buys are most significant—Top leadership has the clearest view
6. Compare to current price—Buying near insider prices = high confidence entry
7. Recent activity matters most—Focus on 0-3 month window for timely signals

• Set alerts: Get notified when insiders buy your watchlist stocks
• Track patterns: Serial insider buying often precedes big moves
• Compare to stock performance: Insider buying before a run-up is very bullish
• CEO buying at all-time lows: Extremely powerful signal
• Large buys after earnings: Insiders buying after selling off = confidence in recovery
• Ignore small sells: Sub-$1M sales are usually routine
• Focus on clusters: Multiple insiders buying within weeks = consensus view

Remember: Company insiders are the ultimate information insiders (legally). When a CEO puts $25 million of their own money into the stock, they're essentially telegraphing their confidence in the company's future. Use this tool to find where the people who know best are putting their money, and consider positioning yourself alongside them.