Hey friends. To research corporate financial filings, you can go to the primary source, the Securities and Exchange Commission (SEC) website. Today, I’ll write about insider trading activity information filed with the SEC.

Go here to enter your company information for locating the SEC filings on the company. Let’s use Micron (MU) and a company named Versartis (VSAR) as examples today for illustrative purpose. On the right side of linked SEC page you can enter MU in the “Fast Search” box. After clicking on search, all Edgar results for MU will appear. On that page, find where it says “Ownership?” in the middle of page above where the filings start. Click on the “include” box; this will include insider filings after you next click “Show All” on the far right side of the page. If you don’t click on “include,” exclude is the default setting and you’ll only see filings except for insider activity filings.

My post today has two simple purposes. First, I want to emphasize the importance of financial filings and that the SEC is the primary (vs. secondary) source for those filings. You are looking at the information received by the SEC, not information extracted from the SEC filings by another group. Second, I want to emphasize an important distinction with regard to insider acquisitions of stock. Managers can acquire stock by purchasing shares on the open market just as you or I do. Or they can acquire stock via stock options. Outright purchases represent true insider buying. Options are usually exercised when the stock price is considerably higher (than the option price) on the open market and management is in a sure place to benefit should it choose to sell the stock just acquired via option exercise. However, whether outright purchase or acquisition via option exercise, the company will report the insider action on Form 4.

Now, back to MU. As I look just now, I see on the left under “Filings” a “4” and over on right, I see a “Filing Date” of 2018-05-30. So, I’ll look at this one. I’ll do so by clicking on “Documents” under the “Format” heading. Go here to see what I’m seeing after clicking on “Documents.” Now, on the first Primary Document line I’ll click on the edgar.html item listed in red under the Document column. Clicking that takes me to this actual form 4.

We can read that company officer Scott J. Deboer, on 5/25/2018, acquired via stock option exercise 8,475 shares of MU stock at $28.765 per share and another 16,320 shares at $17.41 per share and then sold all those same shares (total of 24,795 shares) on the same day for $62 per share. Were these insider transactions? Yes. Was there an insider acquisition of shares involved? Yes. Was this an insider purchase of shares on the open market at the current price? No. In fact, rather than buying shares at the current price of $62/share, Scott sold for $62/share the shares he had just acquired via option exercise, and at quite a profit I might add.

Rather than go through the whole process (which is repeated step by step) for investigating VSAR, go here to see a form 4 for actual insider purchases on the open market by a company Director of VSAR. On this form 4, you’ll see this party made 3 sizable actual buys as denoted by “P.”

Insider buying is an important indicator for many. However, insiders as a norm acquire far more shares via granted options that later get exercised than by actual purchase on the open market. As an indicator of value, the actual purchase carries more weight for obvious reasons.

See you next time.