Insider#321tier 1experimental liveNew

`routine vs opportunistic 10b5 1`

cadence: Eventdata: mediumshort only

2021

Larcker, Lynch & Tayan (2021) "Gaming the System: Three 'Red Flags' of Potential 10b5-1 Abuse", SSRN.

What it checks

Routine insider sales are noise; opportunistic ones (one-off or right after a plan is adopted) tend to mark short-term tops.

Mechanism

Routine, evenly-spaced 10b5-1 sales carry no predictive information (insider pre-committed long before knowing the price path). Opportunistic sales — unscheduled, isolated, or quick-fire shortly after plan adoption — are where the negative drift lives. Short only the opportunistic subset.

No production champion data for this family yet. Stats appear once the discovery pipeline promotes at least one strategy with this family tag, or once a multi-family blend that includes it earns a champion slot.

Signal rule

Form 4 sale AND (insider not in routine-pattern set OR plan adopted within 30d before sale) -> SHORT on T+1, hold 10/20/60d.

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.
sec_insider_10b5_plans
Worker data table — see services/worker schema.

Expected edge

Paper alpha: ~-2-4% over 60d on opportunistic subset
Paper window: T+1 to T+60d

Larcker-Lynch-Tayan 2021 documents the opportunistic-subset asymmetry; mid-cap CFO/CEO opportunistic sales -2-4% over 60d.

Related families

insider form4Insider-Activity

Lakonishok-Lee 2001, Cohen-Malloy-Pomorski 2012: corroborated insider purchases (Form 4 transaction_code='P') from multiple insiders within a short window are the single most-predictive insider signal — ~6%/year alpha over 6-12 months. Single-insider buys are noisy; cluster buys (3+ distinct insiders, or a single buy > $1M from CEO/CFO) are not. Long for 60 days on cluster buys; long for 30 days on a single $1M+ transaction. Sales are deliberately ignored — they're confounded by liquidity, diversification, and options expiry.

form4 cluster anomalyInsider

Anomaly-tail Form 4 insider PURCHASE clusters (>=4 distinct insiders within 30 days, or >=3 insiders with aggregate dollar value >= $2M) strip routine-liquidity noise that dominates single-insider buys. Long the issuer 60-180d post-cluster.

form 144 overhang shortInsider / SEC filings

Form 144 notices reveal planned restricted/control-share sales. Large notices can create supply overhang before actual Form 4 execution appears.

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routine vs opportunistic 10b5 1