Not all trades are created equal. For example, the fact that a COO sells part of her equity awards for tax purposes says very little about her sentiment towards the company. However when a CEO of a tech company substantially increases his position when the stock’s momentum is in an uptrend – that trade provides a lot more information.

Taking this into account, our model ranks companies based on insider sentiment to identify the transactions and insiders with the highest predictive strength. It then delivers a trading signal in the form of a score, which can be used as an input to the portfolio construction process.