Method

How a signal is scored, how a result is measured, and where the rules come from.

a. What starts a signal

Only a real insider purchase starts a signal: an open market buy reported on a Form 4 with transaction code P. Sales never start one, however large. Planned sales, option exercises, grants and gifts do not count as buys.

Mutual funds and closed-end funds are left out. Several related owners on one filing count as one buyer.

b. The points

All the buying of one company inside the window is scored together, not one buy at a time: the size is everything the insiders spent between them, and the role is the most senior of them. Points add up; the total decides the dots.

WhatPoints

Every signal

An insider bought on the open marketWhere a signal starts. Everything below is added to it. 1

Size of the buying

$250K or more 1

$1M or more 2

$5M or more 3

Who bought

CEO, CFO, chair, president or founder 2

Director or 10 percent owner 1

Cluster

Two or more insiders buying the same company within 14 daysAt least $25K between them, and each of the two must have put in $5K of their own. A lone buyer needs $50K. The floor is what tells several people deciding apart from one company wide purchase plan that puts a small identical amount in many names on one day. 2

Three or more insiders within 14 daysCounting only the ones who each put in $5K. 3

Boosters, which never start a signal

Each House or Senate member who reported buying the same stock in the last 30 daysTwo at most. 1

An activist Schedule 13D in the last 60 daysNot from the company's own insider, and under 25 percent. 1

A watched fund that opened or added the position last quarter 1

Score to dots

Strongest6 points or more

Strong4 or 5 points

NotableUnder 4 points

c. How a result is measured

Entry is the close of the first trading day after the filing became public. Results are taken at one week and at one month, and every result sits next to the S&P 500 over the same days.

Until the first result is in, the card reads "Result in 5 trading days", counting down.

d. How a member's record is measured

Each report counts as one decision, the ticker it names, from the close of the first trading day after the report was filed. One ticker per report. Decisions carry equal weight; a return is the plain average.

Two boards, two rules. House and Senate members need at least 5 decisions and 3 companies to appear. Insiders need 3 buys, each with a one month result. Rows at the minimum carry the tag thin; under the minimum is not on the board at all. No board is shown without the S&P and prices for 90 percent of the stocks it needs.

e. How old the news is

The law gives each source time before a trade has to be reported. Every card shows the trade date and the day it became public. A fund report lands up to 45 days after a quarter that ran 90 days, so a trade in it is 45 to 135 days old when it becomes public.

InsidersUp to 2 business days

CongressUp to 45 days

Funds45 to 135 days

StakesWithin 5 business days

f. The research behind the rules

The rules follow published work on insider trading. Short versions:

Insider purchases carry information; insider sales do not.Jeng, Metrick and Zeckhauser, 2003

Buying by several insiders across a firm predicts returns.Lakonishok and Lee, 2001

Top executives' trades are more informative than other insiders'.Seyhun, 1986

Non-routine trades carry the signal; routine ones do not.Cohen, Malloy and Pomorski, 2012

Evidence on Congress is mixed: positive in Ziobrowski 2004 and 2011, negative in Eggers and Hainmueller 2013. So Congress is a booster, never a starter.

g. What this is not

Information, not advice. Aeon makes no picks and tells no one what to buy or sell. A signal is a count of what public filings say, scored by fixed rules written on this page.

The API carries no prices and no returns. Where a page shows how a signal turned out, the API gives the address of that page.