When multiple executives or directors purchase shares of their own company within a short timeframe.
Definition
Cluster buying occurs when three or more corporate insiders (such as the CEO, CFO, and board members) independently execute open-market purchases of their company's stock within a condensed period, typically 30 to 90 days.
Why it matters for Whale Tracking
While a single insider might buy stock for various personal reasons, multiple insiders buying simultaneously is statistically one of the strongest bullish signals in the market. It indicates a consensus among leadership that the stock is undervalued or that positive catalysts are approaching.
Real-World Example
"If the CEO, CFO, and a prominent Director of a mid-cap tech company all file Form 4s showing direct purchases of stock within the same week, algorithmic scanners flag this as a 'Cluster Buy', instantly raising the company's insider sentiment score."