🤔 What Is a Form 4?
A Form 4 is a document that corporate insiders — executives, directors, and major shareholders — must file with the SEC whenever they buy or sell shares of their company's stock. Think of it as a mandatory receipt that gets filed every time an insider trades.
The SEC requires these filings to be submitted within two business days of the transaction. This means you, as a retail investor, can see what insiders are doing almost in real time — a powerful tool for your investment research.
💡 Why Should You Care?
Form 4 filings are the primary way investors track insider buying and selling activity. They reveal exactly who traded, how many shares, at what price, and what type of transaction it was. This is the raw data behind every “insider buying” or “insider selling” headline you see.
🔍 How to Find Form 4 Filings on EDGAR
All Form 4 filings are publicly available on the SEC's EDGAR (Electronic Data Gathering, Analysis, and Retrieval) system. Here's how to find them:
Go to SEC EDGAR
Visit sec.gov/cgi-bin/browse-edgar or simply search “SEC EDGAR company search” on Google.
Search for the Company
Type the company name or its CIK number (the unique SEC identifier — learn more about CIK numbers in our SEC filings guide).
Filter by Form Type
In the “Filing Type” field, enter “4” to see only Form 4 filings. You can also enter “4/A” to see amended filings.
Open and Read
Click on any filing to see the full details. The filing will show you all transactions reported by that insider for that date.
🚀 The Easier Way
Instead of navigating raw EDGAR filings, you can use Stockadora's Insider Trading Intelligence to see Form 4 data translated into plain English with AI-powered analysis.
📋 Anatomy of a Form 4
A Form 4 has several key sections. Let's walk through each one so you know exactly what you're looking at:
1. Reporting Person
This section identifies who made the trade. It includes the insider's name, their relationship to the company (e.g., CEO, Director, 10% Owner), and the company's name and CIK number.
What to look for: The insider's title tells you how much influence and information access they have. A CEO purchase carries more weight than a minor officer's.
2. Issuer Information
This section identifies the company whose shares were traded, including the company name, CIK number, and ticker symbol.
What to look for: Make sure you're looking at the right company — insiders might sit on multiple boards.
3. Table I — Non-Derivative Securities
This is the most important table for most investors. It shows transactions in common stock — the regular shares you buy and sell on the stock market. It includes the transaction date, code, number of shares, price per share, and the insider's total holdings after the transaction.
What to look for: The transaction code (explained below), the number of shares, the price, and the post-transaction ownership amount.
4. Table II — Derivative Securities
This table covers transactions in stock options, warrants, restricted stock units (RSUs), and other derivative instruments. These are more complex financial instruments that give the insider the right to acquire common stock under certain conditions.
What to look for: Option exercises (converting options to shares) and new grants appear here. Option exercises paired with immediate sales (same-day sales) are usually routine compensation events.
5. Footnotes
Don't skip the footnotes! They often contain critical context, such as whether the transaction was part of a 10b5-1 pre-planned trading arrangement, vesting schedules, or other explanations for the trade.
What to look for: Mentions of “Rule 10b5-1” plans, which indicate the sale was pre-scheduled and not a reaction to current events.
🔤 Transaction Codes Explained
Every transaction in a Form 4 has a single-letter code that tells you what type of trade occurred. These codes are the key to understanding what actually happened. Here are the most common ones:
| Code | Meaning | What It Tells You |
|---|---|---|
| P | Open-market purchase | The insider bought shares on the open market with their own money. This is the most bullish signal. |
| S | Open-market sale | The insider sold shares on the open market. Could be routine or concerning — context matters. |
| A | Grant or award | The insider received shares as compensation (stock grant, bonus, etc.). No money changed hands — this is just part of their pay package. |
| D | Disposition (non-open-market) | The insider disposed of shares outside the open market. This could be a gift, a charitable donation, or a transfer to a trust. |
| M | Option exercise | The insider exercised stock options — converting options into actual shares. Often paired with a same-day sale to cover the purchase cost and taxes. |
| C | Conversion of derivative | The insider converted a derivative security (like convertible notes or warrants) into common stock. |
🎯 Quick Rule of Thumb
P (Purchase) and S (Sale) are the transaction codes most investors care about. The others (A, D, M, C) are usually related to compensation, gifts, or financial instrument conversions and are less informative about the insider's view of the stock.
🛠️ Key Fields to Check
When you open a Form 4, here are the specific fields that matter most for your investment research:
📅 Transaction Date
When did the trade actually happen? Compare this to the filing date — a large gap could indicate the insider waited before reporting (though they're required to file within two business days).
💲 Price Per Share
What price did the insider pay (or receive)? Compare this to the current market price. If an insider bought at $50 and the stock is now at $45, they're currently underwater — that shows real conviction.
📊 Shares Owned After
This tells you the insider's total holdings after the transaction. It helps you calculate what percentage of their holdings they sold or how much they added to their position.
🏷️ Ownership Form
Was this direct ownership (D) or indirect (I)? Indirect ownership means the shares are held through a trust, family member, or entity. Both count, but direct ownership is more straightforward to interpret.
💡 Practical Tips for Reading Form 4s
Tip 1: Always Read the Footnotes
The footnotes at the bottom of the filing often contain the most important context. They'll tell you if the sale was under a 10b5-1 plan, if shares were withheld for taxes, or if there's some other explanation for the transaction.
Tip 2: Look for “P” Codes First
Open-market purchases (code P) are the transactions most likely to indicate genuine conviction. Sales (code S) require more context to interpret. Grants (code A) and exercises (code M) are typically compensation-related.
Tip 3: Calculate the Dollar Amount
Multiply the number of shares by the price per share to get the total dollar value of the transaction. A CEO buying $2 million worth of stock is a much stronger signal than a director buying $10,000 worth.
Tip 4: Check the Pattern Over Time
A single Form 4 is just a snapshot. Look at the insider's filing history over several months or years. Are they a regular seller who sells a little each quarter? Or is this an unusual event? Patterns matter more than individual transactions.
Tip 5: Compare Across Insiders
Look at filings from multiple insiders at the same company. If the CEO, CFO, and three directors all filed purchases around the same time, that cluster signal is far more meaningful than a single purchase.
🚀 Let Stockadora Do the Heavy Lifting
Reading raw Form 4 filings on EDGAR is valuable, but it's also time-consuming. Each filing is a dense table of codes, numbers, and footnotes. If you want to track insider activity across dozens of companies, it quickly becomes overwhelming.
That's why we built Insider Trading Intelligence. Our AI reads every Form 4 filing as it's submitted and translates it into a clear, plain-English summary. You'll instantly see who bought or sold, how much they spent, what percentage of their holdings it represents, and whether it was under a pre-planned trading arrangement.
📊 Explore Insider Trading Intelligence
See the latest insider transactions, decoded and explained by our AI. No more squinting at SEC tables — just the insights you need.
Explore Insider Trading Intelligence →Want to understand the bigger picture? Read our companion articles on what insider buying means and whether insider sales are bad. For a broader introduction to SEC filings, check out our guide on understanding SEC filings and CIK numbers.
💡 Key Takeaways
Remember This
Form 4 filings are the official record of every insider trade, filed within two business days. They're publicly available on SEC EDGAR.
Transaction codes P (purchase) and S (sale) are the most informative. Codes A (grant), D (disposition), M (option exercise), and C (conversion) are typically compensation-related.
Always check the footnotes for 10b5-1 plan mentions, read across multiple insiders at the same company, and look at patterns over time rather than individual transactions.
The dollar value and percentage of holdings traded matter more than the raw number of shares. A $50,000 purchase means very different things for a CEO versus a junior officer.
Important Disclaimer
This content is AI-generated and for educational purposes only. Information about Form 4 filings and insider transactions is based on publicly available SEC data and general knowledge. This is not financial advice — always conduct your own research and consult with qualified financial advisors before making investment decisions.