The mandatory document filed when an insider buys or sells company stock.
Definition
A Form 4 is a document that must be filed with the Securities and Exchange Commission (SEC) whenever there is a material change in the holdings of company insiders. By law, directors, officers, and shareholders owning 10% or more of a company's outstanding stock must file a Form 4 within two business days of the transaction.
Why it matters for Whale Tracking
For quantitative analysts and retail investors, Form 4 is the holy grail of insider sentiment. Unlike news rumors, a Form 4 represents hard capital deployment. When multiple executives file Form 4s for open-market purchases simultaneously (Cluster Buying), it often signals deep conviction in the company's future performance.
Real-World Example
"If Tim Cook buys 10,000 shares of Apple (AAPL) on Monday, he is legally required to file a Form 4 by Wednesday at 10:00 PM EST. Our terminal intercepts this filing in real-time, categorizes it as a 'Purchase', and updates Apple's sentiment score."