Cluster Buy
A cluster buy occurs when multiple insiders (officers or directors) purchase company stock within the same time period, typically within 30-90 days of each other. This pattern suggests coordinated confidence in the company's prospects.
The Trader's Take
The Signal
Cluster buys are extremely bullish signals. When multiple executives independently decide to buy, it suggests they all have access to positive non-public information or believe the stock is undervalued.
The Noise
Occasional coincidental purchases by different insiders are less meaningful than true clusters where 3+ executives buy within a short window.
Actionable Insights
- 1Look for clusters of 3 or more insiders buying within 30 days.
- 2CEO + CFO + multiple directors buying together is the strongest signal.
- 3Cluster buys often precede positive earnings surprises or major announcements.
- 4Track cluster buy patterns on the dashboard's "Hot This Week" section.
Regulatory Context & Context
Common Misconceptions
Cluster buys don't require coordination—they can happen organically when multiple insiders see value.
Not all simultaneous purchases are cluster buys—they must be open market purchases, not grants or exercises.
Frequently Asked Questions
How many insiders need to buy for it to be a cluster buy?
Typically 3 or more insiders buying within 30-90 days constitutes a meaningful cluster buy pattern.
Do cluster buys always predict stock price increases?
While cluster buys are strong signals, they don't guarantee price appreciation—always consider other factors like company fundamentals and market conditions.