How to find an insider in the financial market?
Insiders for certain companies considered its managers and the same person (including legal) holding at least 10% of the company. Since insiders are aware of the company's more than is contained in publicly available information, their buying and selling shares in their own company regulated by US law. In particular, they are forbidden to make a profit for any period of less than six months. This rule makes it impossible for insiders short-term speculation; when insiders buy stock, they expect that the company will be successful in the longer term. All purchases and sales of insiders required to report to the SEC within two business days from the date of the transaction and the SEC immediately make this information publicly available. Insiders report their transactions to the SEC by filling in a special form - the so-called form of number four (form 4). Here is a sample completed form 4.
In early forms of insider fills information about itself and about the company (field 1 - 6). Then there is the actual description of the committed transactions. Table 1 (table I) specified committed transactions in non-derivative securities, usually stock. The second table (table II) specified operations derivative securities, such as options and warrant-s. Field values ??must be clear from the form with the exception of field 3 (Transaction Code). In this field, put the one-letter code of the transaction. Has most of all interested in the purchase of shares by insiders on the open market, which uses a code P (from the English purchase - purchase):
P - purchase on the open market or through a private transaction.
For sale used code display
S - for sale on the open market or through private transaction (from the English sell - sell).
Other codes:
A - indicates that the insider is not received stock through the purchase of, and in some other way, for example it has given them the company as compensation for anything (from the English award - reward).
M - means that the insider shares received through exercising the option or other derivative-a.
Other codes with details can be found here:
sec.gov/about/forms/form4data.pdf
It is important to note that insiders are often themselves confused about the codes and make mistakes. So if you have found the code "P", it is not necessary to hurry to rejoice, and to check the entire form for errors. In particular, in the field 4 must be code "A" (acquisition) and the number of shares from the insider of the transaction in the field 5 has to be increased accordingly. Site author had seen the form in which the "P" code mistakenly used for the sale of shares.
Another thing which you need to pay attention - this is what constitutes insider, whether he is a real person or a fund. When the real person invests his own money, it means much more than when the fund buys. You also need to pay attention to whether the insider buys shares directly or indirectly (code D (direct) or I (indirect) in field 6 of Table 1). Buying insider shares directly is a stronger indicator than when he acquires shares indirectly, such as through a pension plan.
Like all forms are available in the SEC, form 4 for specific companies can be viewed here and here.
And finally, how to find companies that buy insiders. There is a wonderful free website that allows you to do this:
secform4.com/
In early forms of insider fills information about itself and about the company (field 1 - 6). Then there is the actual description of the committed transactions. Table 1 (table I) specified committed transactions in non-derivative securities, usually stock. The second table (table II) specified operations derivative securities, such as options and warrant-s. Field values ??must be clear from the form with the exception of field 3 (Transaction Code). In this field, put the one-letter code of the transaction. Has most of all interested in the purchase of shares by insiders on the open market, which uses a code P (from the English purchase - purchase):
P - purchase on the open market or through a private transaction.
For sale used code display
S - for sale on the open market or through private transaction (from the English sell - sell).
Other codes:
A - indicates that the insider is not received stock through the purchase of, and in some other way, for example it has given them the company as compensation for anything (from the English award - reward).
M - means that the insider shares received through exercising the option or other derivative-a.
Other codes with details can be found here:
sec.gov/about/forms/form4data.pdf
It is important to note that insiders are often themselves confused about the codes and make mistakes. So if you have found the code "P", it is not necessary to hurry to rejoice, and to check the entire form for errors. In particular, in the field 4 must be code "A" (acquisition) and the number of shares from the insider of the transaction in the field 5 has to be increased accordingly. Site author had seen the form in which the "P" code mistakenly used for the sale of shares.
Another thing which you need to pay attention - this is what constitutes insider, whether he is a real person or a fund. When the real person invests his own money, it means much more than when the fund buys. You also need to pay attention to whether the insider buys shares directly or indirectly (code D (direct) or I (indirect) in field 6 of Table 1). Buying insider shares directly is a stronger indicator than when he acquires shares indirectly, such as through a pension plan.
Like all forms are available in the SEC, form 4 for specific companies can be viewed here and here.
And finally, how to find companies that buy insiders. There is a wonderful free website that allows you to do this:
secform4.com/
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