Identifying and tracking insider activity (i.e. when CEOs sell down shares or what they say on earnings calls) can be a useful way to understand what management thinks about the company ’s future performance. Equally, it could also provide irrelevant, unhelpful signals. In this report, we highlight the challenges, literature and use cases on this subject. We also summarise several datasets that may be of use to readers in tracking different types of insider activity.

IT’S WHAT’S ON THE INSIDE THAT COUNTS

It’s common knowledge that insider trading is illegal. But insider transactions or insider buys, on the other hand, are completely legal; the difference being that these are transactions made by corporate insiders who have not been explicitly informed by classified, non-public information.

Whether explicitly informed or not, it’s still a relatively simple notion that those that play a significant role in an organisation have a more innate sense for sniffing out idiosyncrasies – good or bad. Consistent across essentially all academic literature on insider transactions¹⁵⁷⁸ is the idea that the trading habits of individual stakeholders that have a) senior or C-suite roles in an organisation and b) typically been able to sell/buy shares ahead of key stock value shifts, can act as a viable leading indicator of stock performance.

Data providers, such as…