Energy Recovery Director Acquires 289,891 Shares After Exercising Company Stock Options

Robert Yu Lang Mao, Director at Energy Recovery ERII, reported a large exercise of company stock options on November 9, according to a new SEC filing.

What Happened: A Form 4 filing from the U.S. Securities and Exchange Commission on Thursday showed that Mao, Director at Energy Recovery, a company in the Industrials sector, just exercised stock options worth 289,891 shares of ERII stock with an exercise price of $10.37.

Energy Recovery shares are trading up 3.29% at $18.55 at the time of this writing on Thursday morning. Since the current price is $18.55, this makes Mao's 289,891 shares worth $5,377,478.

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The Importance of Insider Transactions

Insider transactions shouldn't be used primarily to make an investing decision, however, they can be an important factor for an investor to consider.

In legal terms, an "insider" refers to any officer, director, or beneficial owner of more than ten percent of a company's equity securities registered under Section 12 of the Securities Exchange Act of 1934. 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 Energy Recovery's Insider Trades.

This article was generated by Benzinga's automated content engine and reviewed by an editor.