Filings, Insiders & OwnershipExtended setexperimental liveNew

Cluster Buy Post Drawdown

Updated eventData needs: lowlong only

2012

Cohen, L., Malloy, C., Pomorski, L. (2012). "Decoding Inside Information." Journal of Finance 67(3), 1009-1043.

In plain terms

When 3 or more insiders buy their own stock within 30 days AND the stock is at least 20% below its 90-day high, it is the highest-conviction insider signal (insiders are buying weakness, not chasing momentum). Long for 2-6 months.

How it works

Cohen-Malloy-Pomorski 2012 document that the strongest insider-purchase drift comes from non-routine clusters, and the subset where insiders are buying AFTER a price drawdown is the highest-information leg. A routine insider buys in all regimes; a conviction insider buys when prices are down. Drawdown-conditioned clusters strip out the routine noise that dominates single-insider filings.

Live results

0 times picked on its own · 3 times inside a blend (3 beat the stock) · updated 2026-06-06

This strategy is a frequent ingredient in blends that combine a few strategies on one stock. It has contributed to 3 such blended picks (3 of which beat simply holding the stock). Picking it on its own is only one of the ways it shows up.

How its picks scored vs. buy & hold

Each pick is graded on a recent year it was never tuned on, against simply owning the same stock

Where its edge concentrates

Share of picks in each company-size group that beat buy & hold

How often it trades

Active vs. patient. Bars on the left mean it waits for rare setups; bars on the right mean it trades often

Return vs. buy & hold

How much each pick beat or trailed simply owning the stock over the test year (extreme microcap moves trimmed)

Loading substrate evidence…

Data dependencies

Daily prices
Adjusted-close OHLCV for every US-listed ticker; primary price feed.
SEC insider trades
Form-4 insider transactions with role, size, and trade direction.

Expected edge

Reported return: +6 to +10% over 6mo
Tested over: T+1 to T+180d

Cohen-Malloy-Pomorski 2012; +6 to +10% over 6mo on contrarian-cluster subset.

Related families

Insider Cluster BuyingFilings, Insiders & Ownership

When several insiders buy their own stock within a short window (a 'cluster buy'), it's the most reliable insider signal. Sales are mostly noise.

Form4 Cluster AnomalyFilings, Insiders & Ownership

When 4+ insiders buy in a single month (a real cluster, not noise), the stock tends to outperform for the next few months.

Form4 Cfo OnlyFilings, Insiders & Ownership

When the CFO personally buys their own company's stock — at least $100k — the stock tends to outperform over the next 2-4 months.

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