Insider trading by sector

The eleven sectors are those of the Global Industry Classification Standard, the scheme MSCI and S&P Dow Jones Indices built and most institutional investors use to split up the equity market. GICS places a company by its main business, judged mostly by where its revenue comes from, and the lines can surprise you: payment networks sit in Financials, not Information Technology, and the big online retailers sit in Consumer Discretionary. We do not license GICS assignments. Each company is placed from the SIC code it reports to the SEC, through a standard crosswalk, with manual fixes for well-known names the SIC code gets wrong. Treat any single company's placement as approximate. A few misplaced names barely move a sector total.

Start with the fact that the two columns are not symmetric. Selling beats buying in almost every sector in almost every quarter, and that says how executives are paid, not what they think of the market. Equity pay arrives as grants and vesting options. An executive who never forms a view on their own shares still sells, to cover withholding tax and to avoid holding most of their wealth in one stock. Nobody ends up buying by accident. That is why buying's share of the dollar flow is the column to watch: it is the part that took a decision.

Compare a sector with its own history, not with other sectors. A sector of large, mature companies whose executives hold big vested stakes will always show a low buy share. A sector full of small companies with founders still on the register will always show a high one. What tells you something is a change, such as Energy running at three times its usual buy share, or Financials going quiet after a year of steady purchases.

Earnings season is the other trap. Companies bar insiders from trading in a blackout window around results, usually from a few weeks before quarter end until a day or two after the release. Companies in the same sector tend to report in the same weeks, so a whole sector can go quiet for reasons unrelated to what its insiders think. A sector with almost no activity is usually in blackout. The window here is 30 days, which is shorter than a reporting cycle, so expect a sector's numbers to swing as its blackout opens and closes.

Open a sector to see which companies sit behind its numbers. A sector total is often one very large purchase at one company rather than broad buying, and a single 10% owner building a position can move a whole sector's bar by itself. The company list is where you can tell a trend from one big check.