How to read a Form 4
Every time a company's officers, directors or biggest shareholders trade its stock, they have to tell the SEC on a Form 4 within two business days. Here's how to read one in a minute, and what separates a buy worth noticing from noise.
The InsiderBeacon team ยท October 23, 2026
In short: look for code P (an open-market purchase), check who bought and how much of their own money it was, compare the shares owned after with before, and see whether a pre-arranged plan or other insiders are involved.
What a Form 4 is
Under Section 16 of the Securities Exchange Act, a company's directors, its officers (the CEO, CFO and others who run it) and anyone owning more than 10% of a class of its stock are "insiders". When their holdings change, they must file a Form 4 with the SEC within two business days of the trade. The SEC publishes it on EDGAR the moment it accepts it, which makes it one of the fastest public signals about what the people running a company are doing with their own money.
Two related forms: a Form 3 is the first statement when someone becomes an insider, and a Form 5 is a once-a-year catch-up for a few kinds of transactions that could wait. Most of the action is on Form 4.
The parts that matter
- Box 1, the reporting person. Who filed. Names are written last name first ("Cohen Ryan").
- Box 2, the issuer and its ticker. The company whose stock it is.
- Box 5, the relationship. Director, officer (with the title, like "Chief Executive Officer"), 10% owner, or other.
- Table I, non-derivative securities. Ordinary shares bought, sold, given or received: the date, the transaction code, the number of shares, (A) acquired or (D) disposed, the price, and the shares owned after the transaction.
- Table II, derivative securities. Options, warrants and convertible notes. An option exercise shows up here, and the shares it creates show up in Table I.
- The footnotes. Weighted-average prices, who actually holds the shares (a trust, a spouse, a fund), and whether the trade was made under a 10b5-1 plan. Don't skip them.
The transaction codes
| Code | Meaning | How much it says |
|---|---|---|
| P | Open-market or private purchase | The one to watch: the insider spent their own money at the market price. |
| S | Open-market or private sale | Less than a buy: people sell for taxes, houses, diversification. |
| A | Grant or award from the company | Pay, not a decision to invest. |
| M | Exercise or conversion of an option | Usually routine; often paired with a sale (S) or tax withholding (F). |
| F | Shares withheld to pay tax on vesting | Mechanical. |
| G | Gift | No money changed hands. Since 2023, gifts are reported on Form 4 like other trades. |
| D, C, J | Back to the company, conversion, other | Read the footnote. |
Five things to check on a purchase
- Who bought. Research has found purchases by top executives, especially the CFO and CEO, carry more information than those by directors or large outside holders.
- How big, against what they already own. A $50,000 buy that doubles someone's stake says more than a $500,000 buy that adds 1%. Compare "owned after" with the shares bought.
- Whether it's routine. Some insiders buy in the same month every year. Cohen, Malloy and Pomorski (2012) found the information is in the "opportunistic" buys that break an insider's usual pattern, and that routine buys carried little.
- Whether others are buying too. Several insiders buying within days, a cluster buy, has been followed by stronger returns on average.
- Whether it was planned. A purchase under a 10b5-1 plan was scheduled months ahead, so its timing says less.
Also check the dates: the trade date against the filing date. Insiders have two business days; a filing weeks late is unusual, and worth noting.
Doing this for every filing
EDGAR receives hundreds of Form 4s on a busy day, most of them grants, option exercises and tax withholding. InsiderBeacon reads each one within about a minute, keeps the open-market purchases of $25,000 or more, and scores them out of 100 on the checks above (the formula is published). You can see every buy filed today on insider buying today, or follow an insider or a ticker to get an alert.
Questions
How long do insiders have to file a Form 4?
Two business days after the trade, under Section 16(a) of the Securities Exchange Act as changed by the Sarbanes-Oxley Act in 2002. The SEC makes the filing public as soon as it's accepted.
Where can I see Form 4 filings?
On the SEC's EDGAR system, for free: search a company or person and filter by form type 4. InsiderBeacon shows the open-market buys and sales from them, by stock and by insider, with alerts.
Is an insider sale a bad sign?
Not necessarily. Insiders sell for many reasons unrelated to the company's prospects: taxes, diversification, a house, a pre-arranged plan. Purchases have generally carried more information than sales, because there's mostly one reason to buy.
What does (A) or (D) mean on a Form 4?
Acquired or disposed: whether the transaction added shares to the insider's holdings or took them away. Read it together with the transaction code.
For information only, from public SEC and congressional filings. Not investment advice. Disclaimer