Many websites and newsletters monitor insider trades, but BoardroomBuys is unique in its ability to calculate historical returns and analyze data for each insider, helping you see which ones typically buy stocks before they surge.
Data
The information is sourced directly from SEC Form 4 filings. All insiders—executives, directors, and 10% shareholders—are required to report their trades using Form 4 within three business days of completing the transaction.
Scoring
How are trades identified as “top trades”?
I use a custom algorithm that evaluates each trade across several key factors. While the exact details are proprietary, the scoring is based on elements such as:
- Historical returns from the insider's past trades
- Success rates (percentage of past trades that had positive returns)
- Volume of trades (higher trade frequency with strong results increases the score)
- Trade size (larger trades carry more weight)
Each insider trade receives a score from 0 to 3. A score of 0 means it’s not considered a “top trade” and is excluded from the emails and spreadsheets. A score of 1-3 indicates it’s a "top trade," with higher scores reflecting better opportunities.
This algorithm was developed by analyzing over 120,000 insider trades over an 8-year span, pinpointing the factors most closely associated with market outperformance. Research has shown that insider trades typically beat the market, and the trades ranked by this system have outperformed average insider trades.
For context, trades with a score of 1 are in the top third of all insider trades, a score of 2 ranks in the top 20%, and a score of 3 is in the top 7%.
Timeframe
The analysis focuses on 1-month and 3-month periods, as these timeframes tend to be the most predictive of insider trading success.
In short, the “top trades” are the ones our system deems most likely to outperform over the next 1 to 3 months.
Definitions
Some quick definitions:
- Weighted Returns: the insider’s returns are weighted based on the size of the trade. So the returns from a $1M trade are weighted 10x more than the returns from a $100,000 trade
- Median Returns: the simple median return of all of the insider’s previous trades
- Win Rate: The percentage of trades that had positive returns
For example, an insider’s 3-month returns are: 31% weighted, 17% median, and a 70% win rate.
This means that 70% of the time the insider buys the stock, the price increases over the next 3 months, and the median returns after 3 months are 17% while the weighted returns are 31%.
This means that when the insider makes bigger purchases, the stock tends to go up more than when they make smaller purchases.