How It Works
Every InsideStox signal starts as a legally required SEC disclosure and survives a gauntlet of filters before it earns a score. Here's the full methodology — nothing hidden.
The raw material: SEC Form 4
When an officer, director, or 10%+ owner of a U.S. public company trades their company's stock, they must file a Form 4 with the SEC within two business days. Every filing is public on SEC EDGAR. InsideStox scans the freshest batch every trading day, covering a rolling two-day window so late-posting filings don't slip through.
We only care about transaction code P — a genuine open-market purchase. Everything else (sales, option exercises, grants, gifts) is discarded automatically.
The anomaly score (0–100)
Surviving purchases are scored on four dimensions:
| Factor | Points | Why it matters |
|---|---|---|
| Purchase size | 10–40 | $1M+ earns the maximum; $50K is the floor. Bigger personal checks mean bigger conviction. |
| First-time buyer | +25 | An insider with no prior open-market purchases suddenly buying is the strongest behavioral reversal. |
| Rare buyer | +15 | Fewer than two prior purchases — unusual, though not unprecedented, behavior. |
| Cluster buying | +15 / +25 | Two insiders buying together earns +15; three or more earns +25. Coordinated conviction is rare. |
| Already spiked | −10 | If the stock has already run 5%+ before we surface the signal, part of the move is gone. We say so. |
Signals scoring above the cutoff make the feed: 70+ is strong, 50–69 notable, below 50 watch-list.
What we exclude — even when other trackers don't
- Hedge fund / 10%-owner accumulation. A fund's systematic position-building isn't a surprise executive bet. Skipped unless an actual officer or director is buying alongside.
- Mislabeled sales. Aggregator headlines routinely report 10b5-1 plan sales as "buys." We verify the SEC transaction code on the actual filing, every time.
- Compensation, not conviction. RSU grants, option awards, and option exercises are pay, not purchases. Excluded.
- Sub-$50K routine buys. Below our materiality floor, even if it's a first-time purchase.
- IPO and offering allocations. Insiders buying at the offering price on debut day is participation, not open-market conviction. Included only with an explicit caveat.
- Serial buyers. An executive who buys every month isn't anomalous. Flagged only when there's a clear step-up — a buy several times their usual size.
- Activist campaigns. Buying during a public board fight may be strategic rather than informational. Included but weighted down and caveated.
Living signals, honest scoreboard
A flagged signal isn't a press release — it's a position we track. Every trading day, each active signal's chart and return-since-flag are refreshed with real market closes. After 30 days a signal retires to the archive with its final result frozen, and after 90 days it ages out entirely — a three-month-old result says little about today's market. Win rate, average return, and best signal are computed from the trailing 90-day record — archived losers included — and displayed on the scoreboard at all times.