Insider buying does beat the market, but only when you filter for the highest-conviction trades. When we backtested over a decade of scored SEC Form 4 filings, a portfolio following only the highest-ranked insider purchase signals returned over 7 times the S&P 500. Most insider filings are noise; the edge comes from knowing which ones to filter for.

3,000 Filings a Week. About 30 That Matter.

Every time a US company executive buys or sells their own stock, they have to report it to the SEC within two business days. That filing, called a Form 4, is public. Anyone can read a Form 4 on EDGAR for free.

The problem is volume, not access. About 3,000 Form 4 filings hit the SEC's EDGAR database every week, and the overwhelming majority (roughly 85%) are routine: stock option exercises, tax withholdings, shares granted as compensation, pre-scheduled sales. None of these tell you anything about what an insider actually thinks about their company's prospects.

Strip those out and you're left with about 500 discretionary equity purchases per week. Real money, voluntarily deployed by people who know their companies better than any analyst.

We score every one of them. About 30 per week earn an Elite or Strong tier label. Those are the signals the backtest is built on, and because the value of an insider signal decays quickly after filing, they're scored in real time rather than in weekly roundups.

If you're investing from Europe, you may not have encountered this data before. SEC Form 4 filings are a US disclosure requirement, and most European investors assume "insider trading" refers exclusively to illegal activity. In fact, legal insider trading disclosure is one of the most studied signals in academic finance, and the data is publicly available to investors worldwide.

How We Separate Signal From Noise

We've analyzed over 4 million insider filings and tracked 129,000+ unique insiders across more than a decade of market data. Every discretionary purchase gets scored on three dimensions:

• Insider Quality: Who is this person? What's their role, their track record, their historical profitability on prior trades? Our analysis of which roles produce the strongest signals feeds directly into this factor.
• Market Context: What's happening around the stock? Recent price action, drawdowns, proximity to 52-week highs or lows.
• Transaction Strength: How large is the buy? Are other insiders buying at the same time? Is this a one-off or part of a cluster?

Each trade is assigned to a tier (Elite, Strong, Positive, Neutral, or Caution) based entirely on these factors.

What the Tiers Actually Deliver

Here's how each tier has performed historically, measured by whether the stock hit a 30% return within three months of the insider's purchase:

Elite-tier signals are about 4 times more likely to hit the +30% threshold within 90 days compared to the unscored baseline. Same raw data, dramatically different outcomes depending on which filings you pay attention to.

The Backtest: $10K to $283K

We ran a straightforward backtest across more than a decade of data (2015–2026) to see what would have happened if you followed only Elite and Strong tier signals.

The rules:

• Start with $10,000
• Invest $100 in every qualifying Elite or Strong signal
• Enter at the filing-date closing price (stock price above $5)
• Exit after 3 months (63 trading days)
• No cherry-picking, no optimization after the fact

The results:

• 12,976 insider trades evaluated
• 11,803 allocated (the rest skipped due to capital constraints)
• The strategy grew to $283,000
• A same-timing S&P 500 benchmark, investing the same $100 on the same dates into the index, reached $38,000
• That's over 7 times the benchmark return

A variant using peak-exit timing (selling at the highest price within the 3-month window instead of the fixed exit date) reached $498,000. That's not a realistic strategy, since you can't time the peak, but it shows how much upside these signals capture when the thesis plays out.

These are hypothetical backtested results. Real-world returns would differ based on execution timing, fees, slippage, and position sizing. The signal-to-noise ratio is consistent across the full 10-year period, not just a single favorable stretch.

What This Means

Not all insider buys are equal, and the ones that historically matter share specific, measurable characteristics.

This backtest doesn't predict the future, but it does show that a systematic approach to filtering and scoring insider purchases has produced meaningfully better results than following insider activity at random, or ignoring it entirely.

We publish our full backtest methodology and results, scoring factors, and tier definitions because we believe transparency builds more trust than a black box ever could.

Related Reading

• The SEC Just Charged 21 People for Insider Trading. Here's Why That's Not What We Track.: Why the insider buying in this data is legal, disclosed, and trackable.
• Insider Buying by Sector: Where the Smart Money Is Going in 2026: Which sectors are seeing the highest concentration of Elite and Strong signals this year.
• WSJ Analyzed 1,400 Insider Buys. Here's What They Missed.: Why unfiltered insider buying studies understate the real signal.

For informational purposes only. Not investment advice.