on-chain data for stocks exists. it’s called form 4.
Signal88 min read·1 hour ago--
most people find out what’s happening inside a company from earnings calls, analyst upgrades, or some guy on twitter with a strong opinion and no position.
there’s a faster way. it’s called a Form 4.
filed within two business days of any insider transaction, Form 4s are the closest thing to real-time intelligence retail investors have access to. and in small caps, where analyst coverage is thin and institutional ownership is sparse, they’re often the only signal that matters before price moves.
we read thousands of them. here’s what we’ve learned.
What a form 4 actually tells you
when a corporate insider — officer, director, or 10%+ beneficial owner — buys or sells shares, they’re required by SEC Section 16 to disclose the transaction on Form 4. two business days. no exceptions.
the filing includes:
- who traded (name, title, relationship to company)
- what they did (bought, sold, exercised options, gifted)
- how many shares and at what price
- their total ownership after the transaction
the two-day deadline is what makes this useful. by the time a 13F drops, the data is 45+ days stale. a 10-K gives you last quarter’s numbers. a Form 4 tells you what the CEO did on tuesday.
in crypto terms: Form 4s are on-chain data for corporate insiders. everything else is lagging indicators.
Transaction codes: the part everyone skips
not all Form 4 filings mean the same thing. the transaction code buried in the filing is what separates signal from noise.
P — open market purchase. this is the one that matters most. an insider took cash out of their personal account and bought shares on the open market at the prevailing price. nobody forced them. no vesting schedule triggered it. they chose to buy. in small caps especially, P transactions from C-suite executives are the strongest bullish signal Form 4 data produces.
S — open market sale. the obvious bearish read, but context matters. officers sell for a lot of reasons — taxes, diversification, a divorce, a house. the question is always: how much of their position are they selling, and does the timing line up with anything in the filing calendar?
M — option exercise. this is where most people get confused. an M transaction means the insider exercised stock options. if it’s immediately followed by an S (exercise-and-sell), that’s weak. they’re just cashing out compensation. if it’s M without S — exercise-and-hold — that’s moderately bullish. they paid to convert options into shares and kept them.
F — tax withholding. automatic, mechanical, meaningless for signaling purposes. ignore these.
G — gift. neutral. sometimes used for estate planning. occasionally used for tax-advantaged transfers that look like gifts but have strategic intent. generally not actionable.
the only transaction code that should make you sit up is P. everything else needs context.
Cluster buying: the signal institutional research desks actually track
a single insider buying shares is interesting. three or more insiders buying within a rolling 14–30 day window is a pattern.
academic research on cluster buying is remarkably consistent: stocks with coordinated insider purchases outperform their benchmarks by 8–12% over the following six months. the logic is simple — if the CEO, CFO, and a board member all independently decide the stock is cheap enough to buy with their own money, they probably know something the market hasn’t priced in.
the key criteria that separate real cluster buys from noise:
- minimum three distinct insiders buying within 30 days
- open market purchases only (transaction code P)
- no insider selling at the same company during the same window
- ideally aggregate purchase value above $100K
when all four conditions hit, you’re looking at coordinated conviction. these people sit in board meetings. they’ve seen the pipeline. they know what the next quarter looks like before you do.
Let’s look at what’s happening right now.
$VIRC - textbook cluster buy in progress
Virco Mfg. Corporation. $96M market cap. makes furniture for schools and institutions. not exactly a momentum darling. and that’s the point.
between april 10 and april 15, four insiders bought shares on the open market:
- Robert Virtue (CEO) — 6,000 shares across three transactions at $5.52-$6.22, spending roughly $35K
- Douglas Virtue (EVP) — 16,027 shares at $6.07-$6.09, spending approximately $97K
- Bradley Richardson (Director): 2,000 shares at $5.59-$5.63, roughly $11K
- Robert Lind (Director): 500 shares at $6.07, about $3K
total cluster: ~24,500 shares, approximately $146K in open market purchases across four insiders in five trading days.
our system flagged cluster buying detected on
$VIRC. dilution risk score: 0 out of 100. no warrants. no convertibles. no active shelf. no ATM. the company is cash flow positive.
15.7M shares outstanding, 12M share float. when the CEO, EVP, a director, and another director all buy the same week on a name with a 12M share float, the filing is telling you something the chart isn’t yet.
$HCI - the CEO who buys 2,000 shares every single day
HCI Group is a $2B property insurance company. CEO Paresh Patel is a 10%+ owner. and he’s been buying 2,000 shares on virtually every trading day since mid-march.
the Form 4 trail reads like a recurring calendar event:
- march 17: 2,000 shares at $15.68
- march 18: 2,000 shares at $16.30
- march 19: 2,000 shares at $15.36
- march 20: 2,000 shares at $15.50
- …this continues through april 14
we count over 20 separate purchase transactions in that window. total: roughly 44,000 shares at an average price around $15, totaling approximately $660K in open market buys. trailing 12-month net position: +108,000 shares.
this isn’t a cluster buy in the traditional sense — it’s one man methodically accumulating his own stock day after day.
when a CEO who already owns 10%+ of the company keeps adding at these volumes, they’re not doing it for the dividend.
326 total Form 4 filings on record. Patel has been doing this for years. that’s conviction you can quantify.
$SPRU - the 10% owner that won’t stop buying
Spruce Power Holding Corp. solar energy. $74M market cap. Steel Partners Holdings, a 10% owner, has been accumulating shares almost daily since march 9.
the purchases are steady and deliberate:
- 6,039 shares on march 9 at $3.60
- 11,823 shares on march 10 at $4.13
- 46,682 shares on march 20 at $4.32
- 14,532 shares on april 9 at $3.98
- 5,027 shares on april 14 at $4.05
trailing 12-month net position: +1,950,849 shares. nearly two million shares accumulated by a single major holder, buying almost every day at $3.60-$4.32.
when a strategic investor with deep pockets buys nearly 2M shares of a $74M market cap company, they’re not swing trading. they’re building a position. the Form 4 filings spell this out in plain text — but you’d have to read 17 separate filings since march to see the full picture.
$CAG - directors buying into the weakness
Conagra Brands is a $7B packaged food company. not exactly small cap, but the insider activity is worth noting because of the timing.
on april 14, two directors filed open market purchases:
- Richard Lenny: 25,000 shares at $14.34, approximately $358K
- John Mulligan: 17,500 shares at $14.31, approximately $250K|
combined: $608K in a single day from two board members.
$CAG has been under pressure. when directors spend over half a million dollars of their own money buying into weakness, the filing tells a different story than the price chart.
The other side: what insider selling actually means
insider buying is almost always voluntary. insider selling is complicated.
executives sell for tax obligations, divorce settlements, estate planning, home purchases, charitable giving, and a dozen other reasons that have nothing to do with their outlook on the company.
A 10b5–1 plan — a pre-scheduled selling program — makes the sale even less informative because it was set up months ago.
but there are patterns worth flagging:
- Volume relative to position: a director selling 2% of their holdings is background noise. a CEO selling 50% the week after an earnings beat is not portfolio rebalancing. that’s exit liquidity.
- Timing relative to filings: insider sales within 30 days before a shelf registration, a going concern warning, or a missed earnings report deserve scrutiny. the SEC’s Section 16(b) short-swing profit rule creates a six-month holding period between buys and sells, so look at the cadence.
- Cluster selling: just as rare and just as meaningful as cluster buying. if multiple executives file S transactions within two weeks, start reading the 10-Q footnotes.
The dilution trap: when nobody’s buying and the company is filing S-3s
insider buying is bullish. the absence of insider buying on a company that’s burning cash is its own signal.
right now we’re tracking small caps with high dilution risk scores — companies with active shelf registrations, active ATM programs, outstanding warrants, convertible notes, and negative cash runway. names like
$GOVX (biotech, $2.8M market cap, -2.2 months cash runway, warrants + convertibles + active shelf + active ATM) or
$INBS ($5.4M market cap, -2.5 months runway, same full dilution stack).
check the Form 4s on these names. you’ll find option exercises and automatic vesting. you won’t find open market purchases. the insiders know what’s coming. the S-3 shelf is loaded. the ATM is dripping shares into the market daily.
when insiders aren’t buying their own stock and the company has weeks of cash left, the Form 4 silence is deafening. in crypto we’d call this the team dumping on the community. in tradfi we call it ‘shareholder value creation’ and file it with the SEC.
Building this into a process
here’s what actually works:
- Filter for P transactions only. ignore option exercises, gifts, and automatic tax withholdings. the only Form 4s that carry genuine signal are open market purchases where the insider chose to spend their own cash.
- Look for clusters. a single insider buying is a data point. three insiders buying the same week is a pattern. cross-reference with zero insider selling during the same window.
- Check the dilution context. an insider buying shares means less if the company just filed a $300M shelf registration on a $50M market cap. always check for active shelves, ATM programs, and outstanding warrants before reading a buy signal as bullish.
- Follow the dollar amounts, not the share counts. a director buying 500 shares of a $200 stock is a $100K bet. a director buying 50,000 shares of a $0.30 stock is a $15K bet. the dollar amount tells you how much skin they’re putting in the game.
- Track repeat buyers. insiders who buy consistently over months (like
- $HCI‘s Patel with 326 Form 4 filings) are building structural positions. one-time purchases after a stock drops 40% could be performative.
Form 4s aren’t predictions. they’re receipts. the people who run these companies are telling you, in legally mandated filings, what they think the stock is worth. the data is public. it’s filed within two days. and in small caps where nobody else is paying attention, it’s the closest thing to an edge you’ll find without a bloomberg terminal.
we read every single one.
signal8.ai if you want alerts when the patterns hit.
