13F Filings and Insider Trading: Following Smart Money

"Smart money" usually means big funds and company insiders. Following them is legal and free: US institutional managers disclose their holdings every quarter on Form 13F, and directors and officers report trades in their own company's stock on Form 4 within two business days. The catch is that a 13F arrives up to 45 days after the quarter ends and leaves a lot out, and most insider selling means very little. Here's how to read both, and where people go wrong.

What Form 13F is

Form 13F is a quarterly report filed with the SEC by institutional investment managers: hedge funds, investment advisers, banks, pension funds, insurers.

• Who files. Any manager with investment discretion over $100 million or more in Section 13(f) securities. The test runs on the last trading day of every month; crossing it once in a year is enough.
• When. Within 45 days after each calendar quarter ends. In practice, Q3 filings land around November 14 and Q4 filings around mid-February.
• What's in it. Only long positions in securities on the SEC's official 13(f) list: US exchange-listed stocks, ETFs, closed-end funds and some listed options. Each line shows issuer, CUSIP, number of shares and value at quarter end.
• What's not. Short positions, cash, bonds, shares listed only outside the US, private stakes and most derivatives. Options the fund has written (sold) aren't reported either.
• Exceptions. The SEC can grant confidential treatment so a fund can delay disclosing some positions, for example while it is still building one.

Every filing is free on SEC EDGAR: search the manager's name and open the filings of type 13F-HR.

Reading changes quarter to quarter

A single 13F is a snapshot at quarter end. The meaning comes from comparing two in a row:

The key rule: look at share count, not dollar value.

Worked example

A fund runs a $10 billion portfolio. On June 30 it holds 1,000,000 shares of XYZ at $100: $100 million, or 1 % of the portfolio. On September 30 it holds 2,000,000 shares at $90: $180 million, or 1.8 %.

• In shares the position grew 100 %: the fund doubled down.
• In dollars it grew only 80 %, because the price fell.
• The filing comes out around November 14. Over those six weeks the price could have gone anywhere, and the fund could have sold the lot.
• You don't know when in the quarter it bought, or at what price: maybe $120, maybe $85.

So a 13F answers "what did the fund believe at quarter end", not "what should I do today".

Why copying 13F blindly is risky

1. Lag. Up to 45 days after quarter end, plus up to three months inside the quarter: data can be four and a half months old.
2. Partial picture. Shorts and most derivatives are invisible. A long position can be one leg of a pair trade whose short leg you'll never see.
3. Hedges. Put options the fund holds show up as a line in the underlying stock, marked PUT and valued by the underlying shares. A big "position" in puts is a bet on a fall, not a rise.
4. Different horizon and size. A fund can sit through a 40 % drop as part of its plan. In a personal portfolio the same drawdown feels very different.
5. Scale. For a $300 billion manager, a 0.1 % position is a rounding error it may hold for diversification. New positions and big weights are what count.

A sensible use of 13F is as a list of ideas for your own research, and as a cross-check: do managers whose approach you trust hold the stocks you already own?

Insider trading reports: Form 4

Legally, insiders are directors, officers and owners of more than 10 % of a company's stock. Every trade they make in their company's shares must be reported on Form 4 within two business days, so this data is far fresher than 13F.

Each Form 4 transaction has a code. Two matter most:

Buys matter more than sells

Executives sell for a dozen reasons: tax bills, a house, diversification, divorce. They buy for usually one: they think the shares are worth more. Research such as Cohen, Malloy and Pomorski (2012) found that the informative trades are the "opportunistic" ones, not the routine trades an insider repeats in the same month every year.

Cluster buys

The strongest pattern is several insiders at the same company buying within a few weeks. Example: after a 30 % drop, the CEO, CFO and two independent directors each buy $150,000–$500,000 of stock. That's no guarantee, but it's a clear sign management thinks the price is too low.

Rule 10b5-1 plans

Many sales run through a pre-arranged Rule 10b5-1 plan: the insider sets a schedule in advance and trades execute automatically. Since 2023, directors and officers must wait a cooling-off period of at least 90 days (capped at 120) between adopting a plan and the first trade, and Form 4 has a checkbox showing a trade was made under such a plan. Planned sales are almost always routine.

Example: a CFO sells $2 million of stock, 5 % of their holding, with the 10b5-1 box ticked. That's a scheduled sale, little reason for alarm. Several executives dumping half their holdings outside any plan is a different story.

ARK Invest: trades every day

Cathie Wood's ARK Invest is a rare case of a manager disclosing trades daily rather than quarterly. ARK publishes full holdings of its active ETFs (ARKK, ARKW, ARKG, ARKQ, ARKF, ARKX) every day and emails trade notifications, which exclude ETF creation and redemption activity. Comparing two consecutive days of holdings shows what ARK bought or sold.

Free sources

• SEC EDGAR (sec.gov/edgar): every 13F, Form 3, 4 and 5 at the source.
• ARK Invest's website: daily holdings files.
• Aggregators that turn the filings into tables, but always check the report date.

Checklist for following smart money

1. Check the dates: which quarter end the 13F covers and when it was filed.
2. Compare share counts, not dollar values.
3. Focus on new positions and large weights, not small tweaks.
4. Remember that shorts and hedges are invisible.
5. For insiders, count only open-market buys and sells (codes P and S).
6. Look for cluster buys and check sales for the 10b5-1 box.
7. Treat all of it as a prompt for your own analysis, not a ready-made signal. Your own entries and exits need their own rules, for example Qullamaggie's swing trading rules.

What Signae shows

Signae's Smart Money section puts this data in plain words:

• Famous investors' portfolios from 13F filings: Warren Buffett (Berkshire Hathaway), Bill Ackman, Ray Dalio, Cathie Wood, George Soros, David Tepper, Stanley Druckenmiller, Seth Klarman, Andreas Halvorsen and Michael Burry. For each one: top holdings and quarter changes, split into new, added, reduced and sold. Follow a manager to get a notification when a new filing lands.
• Who holds it: which of these investors own a stock, right on the asset page.
• Insider trades at US companies over the last 90 days: open-market buys and sells only, no grants or option exercises, with planned sales flagged and a plain-language summary. If an insider buys $100,000 or more of a stock you hold, you get a notification.
• ARK trades for the last 10 trading days, with overall fund inflows and outflows stripped out.
• Crypto whales: follow public wallets and get alerts on large moves.

To talk through what a fund's buy means for your own holdings, ask the AI investing assistant. To see those holdings in one place, connect your accounts as described in how to track a stock and crypto portfolio.

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