🎯 In 30 seconds: People who run a company, and investors who own big chunks of it, have to tell the public what they own and trade. Executives and directors file Form 4 within two business days of a trade. Anyone crossing 5% of a company files a Schedule 13D (if they may push for change) or a 13G (if they are passive). Large money managers list their US stock holdings every quarter on Form 13F, up to 45 days late. These reports are useful clues, mostly about purchases and about who might be pushing the company. They are not a copy-trading service: the data is late, partial, and full of trades made for reasons that have nothing to do with the stock's future.
Who counts as an insider, and what they must report
Under Section 16 of the Securities Exchange Act, a company's directors, its officers (top executives such as the CEO and finance chief) and anyone owning more than 10% of a class of its shares must report their holdings and trades. The SEC calls these people insiders for this purpose. That is a narrower meaning than "insider trading", which is the illegal use of confidential information by anyone.
| Form | When it is filed | What it shows |
|---|---|---|
| Form 3 | Within 10 days of becoming an insider | Starting holdings |
| Form 4 | Within two business days of a trade | Each change: date, shares, price, transaction code |
| Form 5 | Within 45 days after the company's fiscal year ends, only if needed | Small or exempt transactions not already reported |
A change in 2026: directors and officers of foreign private issuers (non-US companies listed in the US) used to be exempt. A law enacted in December 2025, the Holding Foreign Insiders Accountable Act, removed that exemption, and the SEC's rules took effect on March 18, 2026. So Form 4s now exist for many foreign companies' leaders too, though their 10% holders are still excluded.
Reading a Form 4: a decoded example
Every row on a Form 4 carries a one-letter transaction code. The code tells you more than the share count does. The common ones:
- P: purchase in the open market or a private deal. The insider spent their own cash.
- S: sale in the open market or a private deal.
- A: grant or award from the company, such as new stock or options as pay.
- M: exercise or conversion of an option or similar right received from the company.
- F: shares handed back to the company to pay an exercise price or a tax bill.
- G: gift.
Since April 1, 2023, Forms 4 and 5 also have a checkbox showing whether a trade was made under a Rule 10b5-1 plan: a written trading plan set up in advance, when the insider was not aware of inside information. Directors and officers must wait a cooling-off period before the plan can trade, the later of 90 days or two business days after the next quarterly results, capped at 120 days.
Here is one day of filings at hypothetical Company Z, whose stock trades around $40:
| Who | Code | Shares | Price | 10b5-1 box | Plain meaning |
|---|---|---|---|---|---|
| CEO | M | 30,000 | $10.00 | Yes | Exercised old options at their $10 strike |
| CEO | F | 9,000 | $40.00 | No | Gave back shares worth $360,000 to cover tax on the exercise |
| CEO | S | 21,000 | $40.20 | Yes | Sold the rest under a plan set up months ago |
| Director | P | 5,000 | $38.50 | No | Bought $192,500 of stock with her own money |
A headline might say "CEO dumps 21,000 shares." Read the codes and the picture changes. The CEO turned expiring options into cash on a schedule fixed months earlier, which says little about today's outlook. Her total holdings, shown in the column for shares owned after the trade, may still be large. The director's purchase is the interesting row: nobody makes a person buy $192,500 of stock at market price.
That ordering follows the evidence. A widely cited study of US insider trading from 1975 to 1995 by Lakonishok and Lee found that the predictive power came from purchases, while sales showed little. Even then, the effect was concentrated in smaller companies. Insiders sell to pay taxes, buy a house, pay for college or spread risk out of a stock that is most of their wealth. They buy for one main reason.
5% owners: Schedules 13D and 13G
Anyone who comes to own more than 5% of a class of a company's voting shares, alone or acting as a group, must say so publicly. Which form depends on intent:
- Schedule 13D is for holders who may try to influence or control the company. Think of an activist investor who wants board seats, a sale of the company or a change in strategy. Since the SEC's 2023 amendments, the first 13D is due within five business days of crossing 5%, and amendments within two business days of a material change. Item 4 of the 13D, "Purpose of Transaction", is where the activist states what it wants.
- Schedule 13G is a shorter form for holders with no control intent. Passive investors file within five business days. Certain institutions, such as banks, brokers and registered fund managers, and some exempt holders, can file within 45 days after the end of the calendar quarter in which they crossed 5%.
A switch from 13G to 13D on the same stock is worth noticing. It means a quiet holder has decided it may push for change.
Timing example. An activist fund crosses 5% of hypothetical Company W on Monday, March 2. Its 13D is due five business days later, Monday, March 9. It can keep buying in between, so by the time you read the filing it may own 7% or 8%, and the stock often jumps on the news. Reading a 13D tells you why the price moved. It rarely lets you get in before it does.
Form 13F: what the big funds held, and why it is old news
Form 13F is a quarterly list of holdings filed by institutional investment managers with investment discretion over at least $100 million in qualifying securities, mostly US-listed stocks, ETFs and some options. It is due within 45 days after each calendar quarter ends.
Know its limits before you read one:
- It is a snapshot from the last day of the quarter. Trades made during the quarter are not shown, only the position at the end.
- It is late. A position held on March 31 may not be public until mid-May.
- Short positions are left out. The SEC's instructions say to report only long positions. A fund that owns a stock and is also short a similar one looks like a pure buyer.
- Most bonds, foreign shares and cash are not in it, so you see only part of the portfolio.
- Some holdings can be kept confidential for a while if the manager gets permission from the SEC.
Following a famous investor's 13F is popular because it feels like getting their homework. In practice you are buying what they owned up to four and a half months ago, without knowing their hedges, their exit plan or what they sold since.
What ownership data can and cannot tell you
| Source | Can tell you | Cannot tell you |
|---|---|---|
| Form 4 | Exactly what leaders bought and sold, at what price, within days | Why they sold. Most sales are for personal reasons |
| Proxy ownership table | How much of their own wealth leaders have at stake | Hedges that cut their real exposure (look for code K swaps on Form 4) |
| 13D | That someone with 5% or more wants change, and what change | Whether they will get it |
| 13G | Who the big passive owners are | Anything about intent beyond "passive" |
| 13F | Broad trends in what large managers own | Current positions, shorts, or reasons |
| Short interest (FINRA, twice a month) | How many shares are sold short | Whether a squeeze will happen |
For short interest and what it means, see Short selling.
A practical routine
- On EDGAR, open the company's filing page and filter for form 4. Scan the last 12 months.
- Ignore rows coded A, M, F and G. Separate S rows with the 10b5-1 box checked from those without.
- Look for P rows. Note who bought, how much in dollars, and whether several insiders bought within a few weeks.
- Compare each buyer's purchase with what they are paid. Check the proxy statement: a director buying several times her annual board fee is making a real bet.
- Filter for Schedule 13D and 13G filings to see who owns 5% or more, and whether anyone switched from G to D.
- Treat what you find as one input to a thesis, never the whole thesis. Building a stock thesis shows where it fits.
Try it
Pick two companies on your Watchlist. For each, list every Form 4 from the past year in a small table: date, person, code, shares, price, dollars, 10b5-1 box. Total the open-market purchases (code P) and the sales made outside a plan. Then add a price alert with Alerts and check back in three and six months. Over time you will see for yourself how often insider buying lined up with what the stock did next, and how often it did not.
- A Form 4 row shows code F. What happened? Answer: The insider handed shares back to the company to pay an exercise price or taxes. It says little about the outlook.
- Which says more on average, an insider purchase or an insider sale? Answer: A purchase. Research has found purchases more informative, because sales happen for many personal reasons.
- How late can a 13F be? Answer: Up to 45 days after the quarter ends, so a position can be months old when you read it, and shorts are not shown.
- What is the difference between a 13D and a 13G? Answer: A 13D is for 5% holders who may seek influence or control; a 13G is a shorter form for passive holders.
Sources
- Investor.gov (SEC): Insider Transactions and Forms 3, 4, and 5
- SEC: Rule 10b5-1 insider trading arrangements fact sheet
- SEC: Modernization of Beneficial Ownership Reporting fact sheet (13D and 13G)
- SEC: Frequently Asked Questions About Form 13F
- SEC: Final rules under the Holding Foreign Insiders Accountable Act (2026)
- NBER: Lakonishok and Lee, Are Insiders' Trades Informative?