Insider Net Buying: formula and how to read it

Insiders' open-market buying minus selling over 90 days, as a share of the company's value. Dollars of open-market purchases minus open-market sales by the company's officers, directors and 10% owners over the last 90 days (SEC Form 4 codes P and S), divided by market capitalization. Awards, option exercises, tax withholding and gifts are left out. Zero when no insider bought or sold. Filings reach the data provider within about two business days of a trade.

Stock Meadow groups it under Company, and shows it in tables as Insider net buy.

Insider net buying = (open-market purchases − open-market sales, in dollars, over the last 90 days) ÷ market capitalization. Dollars are shares × price from SEC Form 4 filings; only transaction codes P (purchase) and S (sale) count.

Over 90 days a company's directors buy $3 million of its shares and one executive sells $1 million. Net buying is $2 million. With a market capitalization of $2 billion, insider net buying is 0.10%. The numbers are made up for illustration.

Positive means insiders bought more than they sold, and the larger the figure, the more they put in relative to the company's size. Negative means net selling, and zero means no open-market trades. Insiders sell for many reasons but mostly buy because they expect the shares to rise, so many investors treat buying as the stronger signal.

When Stock Meadow ranks stocks, a higher figure scores better.

• Selling is often routine. Many insiders sell on a pre-arranged schedule (a 10b5-1 plan) or to pay taxes after shares vest, so a negative reading is weaker evidence than a positive one.
• Only open-market purchases and sales count. Share awards, option exercises, gifts and shares withheld for taxes are left out.
• Filings lag. A Form 4 is due within two business days of the trade, so the figure trails the very latest trades.
• It is scaled by market capitalization, so a small purchase in a tiny company can look as large as a big purchase in a giant one. Read it together with the list of trades on the stock page.

How Stock Meadow handles gaps. Usually blank when market capitalization isn't available.

Treat any single metric as one clue, and read the company's financial statements before drawing a conclusion. Stock Meadow's figures are research tools based on reported data, not investment advice.

In Weighted ranking, Z-score composite and Balanced (no weak link), you choose the metrics and weights yourself, so you can include it in a custom score.

No fixed-recipe model scores it.

Read about every scoring model on the scoring models page.

• Number of Insiders Buying: how many different insiders bought shares on the open market in 90 days.
• Congress Net Buying: purchases minus sales of the stock by members of Congress in 90 days.
• 12-1 Momentum: last year's return, ignoring the most recent month.
• P/E Ratio (Price-to-Earnings): what you pay for each dollar of profit.

What is insider net buying?

It is the dollar value of shares that a company's officers, directors and 10% owners bought on the open market over the last 90 days, minus the value they sold, as a percentage of the company's market capitalization.

How soon do insider trades show up?

Officers, directors and 10% owners must file SEC Form 4 within two business days of a trade. Stock Meadow reads the filings every day, so a trade usually appears within a few days.

Why are awards and option exercises not counted?

They are part of pay, not a choice to put money into the shares. Only trades on the open market say something about what an insider thinks the shares are worth.

Is a higher or lower Insider net buy better?

When Stock Meadow ranks stocks, a higher figure scores better. That is a ranking convention, so read Insider net buy alongside other measures and compare similar companies.

Why is Insider net buy blank for some stocks?

It is usually blank when market capitalization isn't available. Stock Meadow leaves the figure blank rather than guessing it.