Cluster buys: when insiders buy together
One executive buying their company's stock is a data point. Three of them buying within a week is a pattern, and one of the more studied ones in insider trading research.
The InsiderBeacon team ยท October 23, 2026
In short: a cluster buy is two or more different insiders buying the same company's stock on the open market within a short window, usually 10 days. Research has found clustered purchases followed by abnormal returns of more than 2% over the next month, on average.
What counts as a cluster
There's no legal definition; it's a pattern people look for in Form 4 filings. The common version: two or more different insiders (directors, officers) at the same company make open-market purchases (transaction code P) within about ten days of each other. Grants, option exercises and buys under a pre-arranged plan don't count, because their timing wasn't the insider's own call.
Why it can mean more than one buy
Any single insider can buy for reasons that have little to do with the stock: to show confidence after bad news, to meet an ownership guideline, because they always buy in March. When several people with different jobs and different information decide, separately, to put their own money in at the same time, those idiosyncratic reasons are less likely to explain all of it.
Alldredge and Blank (Journal of Financial Research, 2019) studied daily insider trades and found that insiders tend to cluster their trades with colleagues, especially those they work closely with, and that clustering is stronger when insiders' informational advantage is larger. Clustered purchases were followed by abnormal returns in excess of 2% over the following month. Like all such findings, that's an average across many trades: individual clusters can and do lose money.
How to spot one
- Watch the open-market purchases (code P), not all Form 4s.
- Group them by company and look back ten days from each new buy.
- Count different people, not filings: one director buying three days in a row is one insider.
- Leave out buys marked as made under a 10b5-1 plan.
- Weigh who's in it. A CEO, CFO and two directors says more than three directors who always buy together after the annual meeting.
InsiderBeacon does this as each filing arrives: every buy carries the number of insiders who bought that stock within ten days, a cluster of three or more gets its own alert, and the cluster buys page lists the last two weeks' clusters, live.
Traps to avoid
- Tiny amounts. Five directors buying $5,000 each is a show of support, not conviction. Look at the dollar size against each person's pay and holdings.
- After a crash. Clusters often follow a sharp fall, sometimes as a deliberate signal to the market. That can still be informative, but the buying itself is partly a message.
- Offerings and rights issues. Insiders taking part in a company's own share sale can look like a cluster. Check whether the purchases were at the offering price.
- One family, many filers. A founder, their trust and their foundation can file separately for what is one decision.
Questions
How many insiders make a cluster buy?
At least two different insiders buying within a short window, often 10 days. Many investors pay most attention to three or more.
Do cluster buys beat the market?
On average in past research, yes: Alldredge and Blank (2019) found abnormal returns above 2% over the following month after clustered insider purchases. Averages hide a wide spread, and past results don't predict future ones.
Can I get an alert for cluster buys?
Yes. InsiderBeacon sends a cluster alert when three or more insiders buy the same stock within ten days, and shows the count on every buy.
For information only, from public SEC and congressional filings. Not investment advice. Disclaimer