Net insider flow
Insiders
What it is
Net dollar sum of transactions by company executives and directors over the last 90 days (purchases minus sales). Insiders are presumed to know the company better than the market — their actions are weak but informative signals.
How to read it
Net positive flow (net buying) is a positive signal — insiders are putting their own money in. Strong net negative flow (massive net selling) can signal lack of confidence in current valuation, or simply legitimate patrimonial diversification. Always look at WHO sells (CEO vs a VP) and WHY (planned 10b5-1 vs discretionary sale).
Common reference points
- Massive net buying — positive signal> +$5M
- Moderate net buying+$0.5 – $5M
- Balanced or neutral flow−$0.5 to +$0.5M
- Moderate net selling−$5 to −$0.5M
- Massive net selling — caution< −$5M
Orders of magnitude, not a rule: the same number does not mean the same thing from one sector to the next.
What it does not tell you
Insider sales are frequent and often legitimate (stock compensation, tax planning). Insider purchases are rare and much more significant. Net selling IS NOT a sell signal in itself — insiders can sell while the company is doing fine.
Other measures — Positioning
Educational content. Polaris is not a registered investment adviser and makes no recommendation.