Richard R Deluca, Evpandpresident And Merck Animal Heallth at Merck & Co MRK, made a large buy and sell of company shares on October 29, according to a new SEC filing.
What Happened: A Form 4 filing from the U.S. Securities and Exchange Commission states that Richard R Deluca exercised options to purchase 135,405 Merck & Co shares for $0 on October 29. They then sold their shares on the same day in the open market. They sold at a price of $87.56 to raise a total of $11,856,265 from the stock sale.
Following the transaction, Deluca still owns 118,086 shares of Merck & Co worth $10,452,972.
Merck & Co shares are trading down 0.56% at $88.52 at the time of this writing on Wednesday morning.
The Importance of Insider Transactions
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.
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