When analyzing insider transactions, converting insider positions from text to abbreviations like DIR (Director), VP (Vice President), etc., is crucial. The position of an insider is key to detecting trends and market dynamics, especially in large-cap and mid-cap companies where only a select few have access to the most sensitive information. While small-caps can be attractive for investing, the nature of big companies makes insider positions particularly important.
Problem 1: Translation
The first data we pulled for the SIT project was from the Swedish stock market. We had to process over 3,000 different strings, often representing similar positions. Translation was our initial challenge.
Problem 2: Multiple Positions for the Same Person
This often occurs in small-cap companies. For example, Mr. Jones might be listed as "Director & CTO" when buying or selling stock. Our solution is to consider the highest role in such strings. So, "Director / CTO" is simplified to "CTO."
Problem 3: Grammar Mistakes, Unknown Abbreviations, and Company Names in Position Titles
Phrases like "Chef FoU," "Affärsområdeschef H&M," or "regionchef" can be confusing. We manually assign codes to these positions and let our platform automatically detect similar cases.
Problem 4: Lack of Standardization
Despite living in a globalized world, local laws regulating insider reporting do not strictly enforce a standardized approach for naming positions when insiders (or brokers) report their transactions. This lack of consistency can make it challenging to accurately categorize and analyze insider activities.
The basic and logical principle we utilize is: the higher the position, the greater the awareness of what's going on in the company.
NB: All corporate insiders (when a company buys/sells shares of another company) are marked with code 'C' even if the source of information indicates a specific position. We intentionally group all corporate insider transactions under this single attribute.
One example of why position codification matters is when calculating the SITI index. We exclude transactions executed by insiders with the position code "O" (Other).
There is a separate page that shows all positions and associated codes.
When codifying insider positions, one of our primary goals was to accurately identify key groups crucial for our calculations, such as 'O' (Other) and 'C' (Corporate) insiders.
We update the position code for each insider whenever new insider transaction data comes in. You can access the insider list, position codes and their transactions through our API or via a connector to the Google BigQuery dataset. These features are available to our paid customers.