Founder Liquidity Event

The framework reads founder selling through three diagnostic frames: routine diversification (small percentages relative to remaining holding, conducted through pre-arranged trading plans), wealth-event milestones (post-lockup-expiration sales clustered around specific liquidity windows), and unusual concentration (large percentages relative to remaining holding, outside pre-arranged plans, often clustered with other insider selling). The first frame is normal capital management. The second frame is structural and predictable. The third frame fires the pattern. The diagnostic is not the selling itself but the deviation from expected patterns. Insider selling clusters above sector baseline are the leading indicator the framework tracks.

The framework's diagnostic conditions reference sector baselines rather than absolute thresholds. Different sectors and company types have different normal ranges of insider selling — high-growth founder-led companies historically show sustained moderate insider selling, while mature dividend-payers show minimal selling. The pattern fires when the trailing 6-month insider selling activity exceeds the company's own historical baseline by more than one standard deviation, multiple insiders (not just the CEO) participate concurrently, and the selling occurs outside pre-arranged trading plans. Free registration shows the framework's per-ticker baselines and current readings across the panel.

No. The framework explicitly distinguishes routine diversification, wealth-event milestones, and unusual concentration. Founders who hold most of their wealth in a single company face legitimate diversification needs that produce regular small-percentage sales without diagnostic significance. Post-lockup expiration produces predictable selling concentrated in specific windows that markets typically absorb. The pattern fires only when selling deviates from these expected behaviors at scale, with multiple insider participation and concentration outside pre-arranged plans. Many investor concerns about insider selling reduce to misreading routine activity as diagnostic.

Cluster selling — multiple insiders disposing of shares within a tight window — is the framework's strongest insider selling signal. The diagnostic is not coordinated decision-making (which insiders cannot engage in legally) but parallel reading of company conditions by people with information advantages. When CFO, COO, board members, and the CEO all transact within the same quarterly window in directions that share economic exposure, the read is that the information environment they share is producing parallel risk reduction. The framework's case library documents cluster selling patterns at multiple companies that subsequently produced significant declines.

SEC Form 4 filings within two business days of insider transactions provide the underlying data. The framework's diagnostic conditions process these filings into composite reads — clustering, magnitude relative to baseline, plan-versus-non-plan, and cross-insider participation. Contra members see the per-ticker insider selling reads on the live engine, refreshed as Form 4 filings land. The framework's contribution is the composite read; investors can also examine raw Form 4 data through SEC EDGAR. The discipline is distinguishing routine activity from cluster firings, which requires the baseline-relative read the framework provides.