SEC EDGAR Form 4 — mandatory disclosures filed within 2 business days when corporate insiders (officers, directors, 10%+ owners) buy or sell company stock.
Polls the EDGAR RSS feed every 30 minutes from 8:00 AM – 4:30 PM ET (pre-market scan catches overnight filings). Pulls 100 most recent filings per scan.
| Filter | Rule | Why |
|---|---|---|
| Transaction Type | Code P (open market purchase) only | Grants, exercises, gifts are noise — only code P means the insider chose to spend their own money |
| Ownership | Direct (D) only, not indirect (I) | Indirect holdings through trusts/funds are less conviction |
| Minimum Value | ≥ $50,000 | Small buys ($1-5k) are often routine or symbolic. Sub-threshold buys from the same insider are accumulated over 30 days — if the combined value crosses the minimum, a signal fires. |
| Market Cap | ≥ $0.5B | Filters out micro/small-caps with low liquidity |
| Insider Role | CEO, CFO, COO, President, Director, or titled officer | Only insiders with meaningful access to company information |
| 10b5-1 Plans | Excluded | Pre-scheduled trades set up months in advance — no current insider knowledge |
| Factor | Rule |
|---|---|
| Base Score | purchase_value / $100,000 |
| CEO / President | Score × 1.5 |
| CFO / COO | Score × 1.3 |
| Director / Other | Score × 1.0 |
| Holdings Boost (25%+) | Buying 25%+ of existing holdings → Score × 1.5 |
| Holdings Boost (10-25%) | Buying 10-25% of existing holdings → Score × 1.3 |
| Cluster (3+ insiders) | 3+ unique insiders buying same ticker in 14 days → Score × 2.0 |
| Cluster (2 insiders) | 2 unique insiders buying same ticker → Score × 1.5 |
| Condition | Action |
|---|---|
| 3+ insiders selling (30 days) | Skip buy entirely |
| 2 insiders selling | Score × 0.5 |
| 1 insider selling | Score × 0.8 |
deploy_pct = min(score × 0.08, 1.0)
raw_size = deploy_pct × cash
capped = min(raw_size, cash × 15%)
notional = max(capped, $300)
Daily deployment capped at 30% of cash.
| Exit Type | Rule |
|---|---|
| Time-Based | Sell after 60 trading days (~84 calendar days) |
| Hard Stop | 25% below entry price (GTC stop order) |
| Trailing Stop | Activates at +15% gain, trails 10% below peak |
| Code | Type | Meaning | Our Action |
|---|---|---|---|
| P | Purchase | Open market buy — insider spent their own money | Trade signal (if passes filters) |
| S | Sale | Open market sell — insider sold shares | Tracked for sell pressure dampening |
| A | Grant | Shares awarded as compensation (RSUs, stock awards) | Filtered out — not a conviction signal |
| M | Exercise | Stock option exercise — converting options to shares | Filtered out — pre-planned compensation |
| F | Tax | Shares withheld for tax obligations on vesting | Filtered out — automatic, no conviction |
| G | Gift | Shares gifted to another person or entity | Filtered out — estate/tax planning |
| J | Other | Miscellaneous transaction types | Filtered out |
| Code | Type | Meaning | Our Action |
|---|---|---|---|
| D | Direct | Insider owns shares personally in their own account | Accepted — strong conviction signal |
| I | Indirect | Shares held through trusts, LLCs, family members, partnerships | Filtered out — weaker conviction |
| Symbol | Meaning |
|---|---|
| ▲ | Bullish — more insider buys than sells in 30 days |
| ▼ | Bearish — more insider sells than buys in 30 days |
| — | Neutral — equal buys and sells |
| ▶ | Click to expand scan details |
2-day filing lag — Form 4 must be filed within 2 business days (vs 45 days for politician disclosures). We enter close to the insider's actual trade.
6-10% annual alpha — Academic research shows consistent alpha on insider open market purchases. Signal is involuntary disclosure — insiders are legally required to file.
25% hard stop — Tighter than the politician agent's 50% stop. Since we enter within 2 days of the insider's trade, a 25% drop likely means the thesis is broken.
60-day hold — Academic literature shows most insider purchase alpha is realized within 1-3 months.