Insiders Buying What Shorts Are Selling

Why crossing these two is worth doing

Most screens built on insider data are worthless because they count the wrong events. An executive receives stock every quarter through awards and vesting, and exercises options on a schedule set years earlier. None of that is a decision to buy. This page counts only Form 4 transaction code P — an open-market purchase, at the market price, with the filer's own money. That is a decision, and it is the only insider event worth reading.

On the other side, a large short position is not a casual bet. Borrowing stock costs money every day it is held, the loss is unbounded, and the position has to be maintained. Someone has done work to hold it.

So a company appearing here is one where both of those are true at once. That is uncommon and it is informative — not because it predicts a direction, but because it locates a genuine disagreement between two groups who are each paying to be right.

The things that would make you wrong

• They are measured on different days. A Form 4 is due within two business days of the trade. Short interest is a snapshot of a settlement date, published about a week later, twice a month. A purchase on this page can postdate the short position beside it. The two numbers are never simultaneous.
• A purchase can be small. One director buying a token amount after an annual meeting is a real code-P purchase and means very little. The purchase and buyer counts are shown so you can see which entries are one gesture and which are several people acting separately.
• Some purchases are pre-scheduled. A Rule 10b5-1 plan can produce open-market buys decided months earlier. Form 4 has a checkbox for it; it is not parsed here, so assume some entries are automatic rather than a fresh decision.
• Days to cover uses FINRA's volume. For a company whose main listing is abroad, US volume understates reality and the ratio comes out far too high. Several perennial entries on lists like this are that, not a crowded short.
• Insiders are often wrong. They are buying their own company, which they are predisposed to believe in, and they have no special knowledge of the market or the sector. Corporate officers are not a trading signal.

Where the two halves come from

Purchases come from SEC Form 4 filings, parsed from EDGAR directly — the full record is on the insider trading pages, with a link to every original filing. Short positions come from the FINRA consolidated short interest file, twice a month, on the short interest page. Neither is bought from a vendor.

Short interest is one of three different measurements that get confused with each other — the position here, the daily flow, and settlement fails. Each company's own page shows all three together: see any ticker under security pages.