Corp. Vp Of Automatic Data Processing Trades $12.28 Million In Company Stock

John Ayala, Corp. Vp at Automatic Data Processing ADP, made a large buy and sell of company shares on September 3, according to a new SEC filing.

What Happened: A Form 4 filing from the U.S. Securities and Exchange Commission reports that on September 3, John Ayala bought 30,127 Automatic Data Processing shares at prices ranging from $107.35 to $169.84 per share, for a total of $4,565,283. They then sold their shares on the same day in the open market at a price of $204.50 to raise a total of $7,719,670 from the sale.

Following the transaction, Ayala still owns 26,527 shares of Automatic Data Processing worth $5,441,483.

Automatic Data Processing shares were up at $205.13 after Wednesday'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.

Important Transaction Codes

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.