Research Insider Filings to Determine “When” to Solicit HNW Prospects

If you’re a prospect researcher or fundraiser, you probably have a good idea of whom to pitch major gift asks to and how much to ask for.  But do you know when to ask?

It’s a tricky question without an easy answer.  But there is a set of data that provides clues to help you determine the best time to solicit donors and prospective donors: stock information.

When a prospect invests a large sum into their portfolio, they may not have assets readily available to contribute a major gift.  Conversely, if an investor cashes out on a hot stock or mutual fund, it might be a great time to reach out and see if they’d like to donate some of their gains.

Thomson Reuters

Thomson Reuters provides much of iWave’s wealth data.  TR is a leading provider of individual and company wealth, stock, and insider transaction information.

Using Thomson Reuters within iWave, you can track the daily wealth creating activities of high net worth individuals, and the companies they work for.  This information helps you make more timely and better educated major gift asks.  Thomson Reuters updates its data daily, so you can be sure you’re looking at the most recent stock data available.

Stock Information Basics

Not all of us are finance experts.  Luckily, the Thomson Reuters data in iWave offers a simple way to make sense of investment information for fundraising purposes.

There are over two million people records and over 100,000 company records in the Thomson Reuters dataset.  This information is sourced from the SEC (USA) and SEDI (Canada).  You may have noticed a lot of “forms” listed in stock records — what’s with that?

Form 3

Form 3 is an SEC filing that indicates a preliminary insider transaction by an officer, director, or beneficial (10%) owner of a company’s securities. These are typically seen after a company’s initial public offering (IPO) when insiders make their first transactions. After a Form 3 is filed, future filings of the same nature are filed under Form 4 (standard disclosure) or Form 5 (annual disclosure).

Use case: A prospect is the owner or insider of a private company that will soon open itself to public investment.  Your prospect may experience a sudden and tremendous increase in net worth.  Keep in mind, however, that doesn’t necessarily mean the prospect is suddenly flush with cash.  This is a volatile time for a newly public company, and if your prospect is a dedicated insider he or she will want to hold most of their investment in the company to help it grow.

Form 4

Form 4 is an SEC filing that relates to insider trading. Every director, officer or owner of more than 10% of a class of equity securities registered under Section 12 of the Securities Exchange Act of 1934 must file with the SEC a statement of ownership regarding such security.  Form 3 is the initial filing, with Form 4 detailing ongoing changes.  This form contains information on the reporting person’s relationship to the company and on purchases and sales of such equity securities.

Use case: If your prospect makes any ongoing investments or divestments of a particular company’s stock, Form 4 will describe the details of these transactions.  This form is helpful to consult when determining if your prospect has cash readily available, or if their assets are tied up.

Form 5

Form 5 is an SEC filing submitted to the SEC on an annual basis by company officers, directors, or beneficial (10%) owners, which summarizes their insider trading activities. This form is simply a combination of year’s Form 4 filings, which are mandatory filings made shortly after insiders make transactions.

Use case: Consult Form 5 to identify trends in a prospect’s investment and philanthropic behavior.  Does a particular prospect tend to divest stock in June and make charitable gifts with that money in July?  Looking through previous years won’t help you predict the future.  However, it could give you an idea of when to schedule your outreach.

Insider Filings

Powered by Thomson Reuters, Insider Filings are sourced from original forms filed with international securities commissions. They include transaction and security ownership information providing detailed context to help you make a more educated ask.

To search a name, type the first and last name of the individual ib the left hand side in the Name Search box, then click search.

If no results return, try typing only the last name of the person, or, if they have a name like Stephen, James, Michael, etc., try nicknames (Steve, Jim, Mike, etc.).

The results display a list of names of possible matches, including the individual’s company name, title, state, whether the stock was bought or sold, the number of shares and price.

Consult our glossary of terms related to Insider Filings, including information on terms like common stock, derivatives, and preferred stock.

Using Stock Information to Calculate Wealth Capacity

Wealth capacity is an estimated five-year dollar amount of what an individual could potentially give to the non-profit industry as a whole.

When calculating capacity based on stock information, use this rule of thumb:

Take 5% of the Total Holdings Value

Calculate Total Holdings Value by taking the most recent acquisition or disposal transaction for each distinct ticker (stock) value.  In the case of multiple tickers, multiply the ‘Shares Remaining’ by the ‘Transaction Price’ and sum these values. If there are multiple transactions in the same day, take the final transaction for the day.

Make sense?  No?  Here’s an example.

ABC Corp. Stock Price: $10
1,500 Shares Remaining
10*1500 = $15,000
Total Capacity = 5% of 15,000 = $750

Multiple Tickers:
ABC Corp. Stock Price: $10
50,000 Shares Remaining
10*50000 = $500,000

XYZ Corp. Stock Price: $25
100,000 Shares Remaining
25*100000 = $2,500,000

Total Holdings = $500,000 + $2,500,000 = $3,000,000
Total Capacity = 3,000,000 * 5% = $150,000

Check out these iWave Support articles for additional insight:

SEDI (Canada) Glossary
SEC Glossary
How to Calculate Capacity
SEC Form Guides

About the author: Ryan McCarvill joined the iWave team in 2016. Ryan enjoys meeting and learning from nonprofit professionals, researching trends in the nonprofit community, and offering strategies for development teams to use iWave’s solutions to meet and exceed their fundraising goals.

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