Insider transaction reports: What stock deals can tell you about a company
Wish you were a fly on the wall when executives make decisions about their company’s future? You can be, in a way. By reviewing insider transactions, you can gain insight into how key stakeholders, especially those in the C-suite, view the company’s outlook.
By reading Securities and Exchange Commission (SEC) filings, specifically forms 3, 4, and 5, you can learn when executives and major shareholders bought or sold their shares. When combined with earnings reports, industry trends, and other data, these transactions can help you form a more complete view of the company’s performance and direction.
Key Points
- Insider transaction reports offer clues about how executive and key shareholders, who have access to privileged information, feel about a company’s outlook.
- These publicly reported transactions are legal as long as insiders follow SEC rules.
- Insider buying can be a bullish sign, but selling isn’t always a red flag, since it often reflects personal or financial reasons.
What SEC forms 3, 4, and 5 reveal about insider transactions
Insider transaction reports are required by U.S. securities law when corporate insiders, such as executives, directors, and major shareholders—anyone who owns more than 10% of a company—trade their holdings. These reports are available to anyone through the SEC’s Electronic Data Gathering, Analysis, and Retrieval system (EDGAR).
Insider transactions aren’t the same as insider trading, which is illegal. Insider transaction reports simply show when a corporate insider bought or sold shares. Executives and others may trade company stock legally as long as they follow established rules.
Companies report insider transactions on three primary documents: SEC forms 3, 4, and 5. Each filing must include basic information such as the person’s name, address, relationship to the company, and the transaction date. In addition, each form has specific reporting requirements.
Form 3 must be filed within 10 days after an individual becomes an insider, such as being hired as an officer or director. They must disclose their ownership of the company’s securities, including type (such as common or preferred stock), number of shares owned, and any options or derivative securities.
Decoding insider transaction codes
When insiders report trades on SEC forms 3, 4, or 5, they use specific transaction codes to indicate the nature of each transaction.
- P: Open market or private purchase of securities
- S: Open market or private sale of securities
- M: Exercise of derivative or conversion privilege, such as stock options
- G: Bona fide gift of securities
- A: Grant, award, or other acquisition of securities from the company, such as through an employee benefit plan
- F: Payment of exercise price or tax liability by delivering or withholding securities
Knowing these codes can help you quickly understand why insiders are buying or selling shares. For a comprehensive list of transaction codes and their meanings, refer to the SEC’s official guide.
Form 4 must be submitted within two business days of an insider selling or buying stock. It details the type of transaction using codes like P for purchase or S for sale, and covers trades of common stock and derivative securities such as options, warrants, or convertible securities
Form 5 needs to be filed no later than 45 days after the company’s fiscal year ends. It covers transactions exempt from immediate reporting, such as small purchases under $10,000, or trades not reported earlier. These filings use the same transaction codes as those on Form 4.
How to make sense of insider buying and selling
SEC Form 4 provides timely disclosures of insider transactions, offering you insights into how company executives and major shareholders are managing their holdings. You can glean valuable information about insider sentiment by examining these filings for:
- Who’s trading. Pay attention to who’s buying or selling. Although C-suite executives get the most attention, activity among mid-level managers can also signal confidence, especially if they’re close to day-to-day operations. Clustered trades by multiple insiders may point to broader sentiment within the company.
- Why they’re trading. Insider buying tends to be more telling than selling. Executives might sell for many reasons, such as to pay taxes or diversify their portfolios. But they usually buy when they believe the stock is undervalued.
- How they’re buying. Open-market purchases carry more weight than transactions tied to options or compensation. Buying stock at full price suggests stronger conviction than acquiring shares at a discount.
- The size of the trade. A transaction’s dollar value means more in context. A small purchase might be a big commitment for one insider, while a large sale could be negligible for another with millions of shares. The size of an insider’s position—how much stock they continue to hold after selling—can say more than the transaction itself.
- When the trade happens. Timing matters. Some insiders act early, well before the market catches on. But if the stock has already jumped since the trade, that buying signal may be stale.
- How it’s disclosed. Watch for footnotes or references to Rule 10b5-1 trading plans. Because these trades are scheduled in advance, they may offer less insight into what an insider thinks about the stock. To curb potential abuse, in 2023 the SEC mandated a 90-day waiting period between when a plan is adopted and when trades can begin.
Executives who sell and those who seldom do
Insider transaction patterns vary widely. Some executives are known for regularly selling stock, while others go decades without a single transaction.
Frequent sellers
- Leon Black. The cofounder and former CEO of private equity firm Apollo Global Management (APO) held onto his company stock for decades, never selling a share until 2024, nearly three years after stepping down. That February, he offloaded 1.55 million shares worth $172.8 million. Additional sales followed: at least 1 million shares ($173.5 million) in December 2024; 500,000 shares ($71 million) in March 2025; and 607,725 shares ($67.7 million) in April 2025.
- Elon Musk. The Tesla (TSLA) CEO was a major seller of the electric-vehicle maker’s stock in both 2021 and 2022. In 2021, he sold 15.7 million shares worth $16.4 billion. In 2022, he sold 22 million to 23 million shares, totaling $22.9 billion, primarily to help fund his acquisition of Twitter (now X).
- Mark Zuckerberg. The Meta Platforms (META) CEO sold about 1.1 million shares in the first quarter of 2025, worth $733 million. The sales were made under a scheduled Rule 10b5-1 trading plan set up months earlier.
When timing raises eyebrows—even for scheduled trades
Several top executives, including JPMorgan Chase’s Jamie Dimon and Meta’s Mark Zuckerberg, sold large volumes of company stock in the first quarter of 2025. These transactions were executed under Rule 10b5-1 trading plans—legal, scheduled sales designed to prevent insider trading.
Still, the timing raised questions. The sales occurred just weeks before President Donald Trump announced new tariffs on key trading partners, a policy shift that sent markets reeling and led to speculation about whether insiders had anticipated the impact.
Even when trades are scheduled months in advance, large sales that coincide with market-moving events can fuel skepticism from analysts and investors. That’s one reason regulators have tightened disclosure rules for 10b5-1 plans and imposed waiting periods between adoption and execution.
Infrequent sellers
- Jeff Bezos. The Amazon.com (AMZN) founder and chair sold 25 million shares in 2024 under a scheduled Rule 10b5-1 trading plan, totaling $8.5 billion. Despite the sale, he retained 909 million shares and remained the company’s largest individual shareholder.
- Jamie Dimon. The longtime CEO of JPMorgan Chase (JPM) sold 1 million shares of the bank’s stock in 2024, valued at $142 million. The sale was his first since becoming CEO nearly 20 years earlier. In February 2025, he sold 870,000 shares for about $234 million. Both transactions were executed under a Rule 10b5-1 trading plan.
- Warren Buffett. The longtime CEO and chair of Berkshire Hathaway (BRK-A) has rarely sold his own shares in the company, instead pledging to donate most of his holdings to charity. Berkshire regularly buys and sells stock in other companies as part of its investment business, including a big chunk of Apple (AAPL) in 2024. But Buffett chose to hang onto his shares.
The bottom line
Insider transactions can help you gauge how executives and major shareholders view a company’s outlook. They’re most useful when considered alongside other factors, such as earnings reports or market trends, rather than alone. Buying tends to signal optimism, while selling may reflect personal motivations that don’t always relate to performance. Use these reports as one piece of the puzzle when shaping your investment strategy.