Methodology / Smart Money

Smart Money: transactions somebody was legally required to disclose

Smart Money reads filings, not intentions. It aggregates transactions that corporate insiders have already disclosed to the SEC on Form 4 within a recent rolling window, and nets them by direction and size.

One of the six factors in the Tapeline composite. One of three mid-weighted factors, alongside Fundamentals and Macro. Tapeline publishes the ordering of the factor weights, not the numeric weights or the scoring equation.

What it measures

Observable quantities, nothing else

• ·Disclosed insider purchases and sales in a recent rolling window, from SEC Form 4.
• ·The signed dollar value of each disclosed transaction — shares changed, multiplied by the disclosed transaction price.
• ·The net of those signed values against the total transaction value in the window.

How the reading is derived

The same procedure on every ticker

1. 01Every disclosed transaction in the window is converted to a signed dollar value, and the net is taken against the gross. The result is a ratio running from all-selling to all-buying.
2. 02That ratio is mapped onto a 0–100 scale around a midpoint, so the reading reflects the balance of disclosed activity rather than its raw size. One large disclosed purchase can outweigh several small disclosed sales, but only on a net basis.
3. 03A ticker with no disclosed filings in the window has no reading at all, and the composite substitutes a mid-range value. An absence of filings is treated as an absence of information, not as a negative signal.

Tapeline deliberately does not publish the numeric weights, the scoring equation, or the exact band edges used to map a measurement onto the 0–100 scale. What is published is the factor set, the weight ordering, each factor’s contribution on every ticker, and the record of every daily top-10.

What feeds it

Data behind this factor

Every category, its refresh cadence and where it appears in the product is listed on data sources.

Known limitations

Where this factor is weak

Every one of these is a property of the method, not a bug waiting to be fixed. They are listed here so a reader can decide how much weight to give the reading.

• —Many disclosed transactions carry no view at all. Sales scheduled months in advance under a 10b5-1 plan, option exercises, vesting events and share sales made purely to cover tax withholding all arrive as Form 4 filings and are netted like any other.
• —Smaller and less-covered companies file rarely, so the window is frequently empty and the factor is unavailable for long stretches.
• —The factor reads corporate-insider Form 4 filings. Congressional disclosure data is ingested by Tapeline and published as its own feed in the product, but it is not an input to this sub-score today.
• —Netting by dollar value means one large filer can dominate a company with many reporting insiders.
• —Insiders are not a uniformly informed group, and this factor makes no claim that they are. The name of the factor is conventional industry shorthand, not an assessment of anyone's judgement.

Limits that apply to the whole product, rather than to this factor, are on limitations.

Common questions

Smart Money FAQ

The other five

Each factor has its own page

Back to the full methodology overview, or read why Tapeline publishes its losing days.