What is a cluster buy?

One executive buying stock can be personal: portfolio rebalancing, contractual commitments, or optimism that never materializes. When the CEO, the CFO, and two directors of the same company all buy in the same week, the most likely explanation is a shared view inside that company.

Studies of Form 4 data have repeatedly found that clustered purchases - especially by senior executives - are among the most informative insider patterns. That is why cluster activity is one of the highest-weighted factors in the Greediness Score.

A cluster on this site always means insiders of one company trading that company’s stock. "5 directors bought LKFN" means five directors of LKFN - never a mix of directors from different companies.

Expanding any clustered trade shows exactly who participated, with each person’s role at the company, so you can judge the cluster’s seniority yourself.

Clusters can be mechanical: several insiders exercising options after an earnings blackout lifts, or participating in a scheduled purchase plan, can look coordinated without being a conviction bet. Check the transaction codes - open-market P purchases are the meaningful kind.

Like every factor on this site, cluster detection describes the structure of filings. It is not a buy signal and not investment advice.