A single insider buying stock is interesting but ambiguous. Maybe they had a bonus to deploy. Maybe they rebalanced a portfolio. Maybe they know something. You cannot tell from one data point.
A cluster buy — several different insiders at one company buying on the open market inside a short window — is much harder to wave away. It takes coordination or shared conviction, and neither is easy to fake.
Drop some purchases on this timeline and watch when it becomes a cluster:
Simplified: here every dot is a distinct insider and every buy is open-market. The real detector also requires the buyers to be different people and the code to be P, and it recomputes as the window rolls forward each day.
The definition, and why it is fuzzy
There is no SEC definition of a cluster. It is an analytical construct, and every source draws the line somewhere slightly different. The choices are:
- How many insiders. This site uses three or more distinct people. Two is defensible but noisy; three is where coincidence starts to strain.
- How long a window. Thirty days is common. Short enough that the buys are plausibly responding to the same conditions, long enough to catch a board that trades on a stagger.
- What counts as a buy. Open-market purchases only — code
P. If grants and option exercises count, every company with a vesting date looks like a cluster. - Whether size matters. Some definitions require a minimum dollar total so that five directors each buying $2,000 does not register.
What a cluster can still get wrong
Shared blind spots. A board that all believes the same wrong thing will all buy, and all be wrong together.
Encouraged buying. Some companies push executives to hold or buy stock, especially after a drop, partly for the optics. That produces a cluster with less signal than an unprompted one.
It keeps falling. Insiders buy the dip and the dip continues. They have more information than the market about the business; they do not have a crystal ball about the price.
How to read one
A cluster is strongest when the buyers are varied — a mix of directors and operating officers rather than five outside directors — when the sizes are meaningful against each person's existing stake, and when nothing in the company's public communications suggests the buying was organised. On this site every active cluster has a page of its own.
The short version
A cluster buy is three or more insiders at one company buying on the open market within about a month. It matters because independent agreement is hard to fabricate. It is a signal to investigate, not a verdict — clusters are wrong often enough that treating one as a buy recommendation is a mistake.
Related: is insider buying a bullish signal? · test your signal-reading · is this insider buy unusual?