Advertisement
New Zealand markets close in 2 hours 12 minutes
  • NZX 50

    12,114.61
    -8.53 (-0.07%)
     
  • NZD/USD

    0.6058
    -0.0020 (-0.33%)
     
  • NZD/EUR

    0.5560
    -0.0012 (-0.22%)
     
  • ALL ORDS

    8,252.30
    -10.10 (-0.12%)
     
  • ASX 200

    8,005.50
    -12.10 (-0.15%)
     
  • OIL

    81.64
    -0.27 (-0.33%)
     
  • GOLD

    2,431.60
    +2.70 (+0.11%)
     
  • NASDAQ

    20,386.88
    +55.38 (+0.27%)
     
  • FTSE

    8,182.96
    -69.95 (-0.85%)
     
  • Dow Jones

    40,211.72
    +210.82 (+0.53%)
     
  • DAX

    18,590.89
    -157.29 (-0.84%)
     
  • Hang Seng

    17,788.82
    -227.12 (-1.26%)
     
  • NIKKEI 225

    41,404.99
    +214.31 (+0.52%)
     
  • NZD/JPY

    96.1070
    +0.0830 (+0.09%)
     

Insiders At Merck Sold US$12m In Stock, Alluding To Potential Weakness

In the last year, many Merck & Co., Inc. (NYSE:MRK) insiders sold a substantial stake in the company which may have sparked shareholders' attention. Knowing whether insiders are buying is usually more helpful when evaluating insider transactions, as insider selling can have various explanations. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.

While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

View our latest analysis for Merck

The Last 12 Months Of Insider Transactions At Merck

In the last twelve months, the biggest single sale by an insider was when the Executive VP & President of Merck Animal Health, Richard DeLuca, sold US$4.6m worth of shares at a price of US$105 per share. That means that an insider was selling shares at slightly below the current price (US$128). When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. We note that the biggest single sale was only 28% of Richard DeLuca's holding.

ADVERTISEMENT

Insiders in Merck didn't buy any shares in the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

insider-trading-volume
insider-trading-volume

If you are like me, then you will not want to miss this free list of small cap stocks that are not only being bought by insiders but also have attractive valuations.

Insider Ownership Of Merck

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. Merck insiders own 0.07% of the company, currently worth about US$220m based on the recent share price. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

So What Do The Merck Insider Transactions Indicate?

There haven't been any insider transactions in the last three months -- that doesn't mean much. It's heartening that insiders own plenty of stock, but we'd like to see more insider buying, since the last year of Merck insider transactions don't fill us with confidence. While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. Case in point: We've spotted 4 warning signs for Merck you should be aware of.

But note: Merck may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.

For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions of direct interests only, but not derivative transactions or indirect interests.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com