CEO Of Automatic Data Processing Insider Trades $15.14 Million In Company Stock

Carlos Rodriguez, President And CEO at Automatic Data Processing ADP, made a large buy and sell of company shares on September 8, according to a new SEC filing.

What Happened: A Form 4 filing from the U.S. Securities and Exchange Commission states that Carlos Rodriguez purchased 48,572 Automatic Data Processing shares at a price of $107.35 per share for a total of $5,214,204 on September 8. They then sold their shares on the same day in the open market. They sold at prices ranging from $203.38 to $205.06 to raise a total of $9,928,680 from the stock sale.

Following the transaction, Rodriguez still owns 115,222 shares of Automatic Data Processing worth $23,408,501.

Automatic Data Processing shares were down at $203.16 after Thursday's closing.

Why Insider Transactions Are Important

Insider transactions shouldn't be used primarily to make an investing decision, however an insider transaction can be an important factor in the investing decision.

In legal terms, an "insider" refers to any shareholder who owns at least 10% of a company. This can include executives in the c-suite and large hedge funds. These insiders are required to let the public know of their transactions via a Form 4 filing, which must be filed within two business days of the transaction.

When a company insider makes a new purchase, that is an indication that they expect the stock to rise.

Insider sells, on the other hand, can be made for a variety of reasons, and may not necessarily mean that the seller thinks the stock will go down.

Transaction Codes To Focus On

Investors prefer focusing on transactions that take place in the open market, indicated in Table I of the Form 4 filing. A P in Box 3 indicates a purchase, while S indicates a sale. Transaction code C indicates the conversion of an option, and transaction code A indicates the insider may have been forced to sell shares in order to receive compensation that had been promised upon being hired by the company.

Check Out The Full List Of Automatic Data Processing's Insider Trades.