Tuesday, May 12, 2015

A Few Insiders Are Slightly Diversifying Holdings. . . No Cause For Concern.

From time to time, various officers and directors use pre-arranged trading plans to sell off small parts of their Merck holdings.

This go 'round, it seems more are not formally pre-arranged (i.e., pre-filed with the SEC). But that is of scant moment. Each of these corporate insiders still hold very large amounts of Merck stock, relative to their overall net worth. In most cases, it is the single largest asset class they hold. So it makes sense that from time to time, they slightly diversify. Afterall, their paycheck is from the same place. You don't want to be over-invested, anywhere. That's just smart financial planning. So the autobot generated reports that link this bit of selling to rising short interest in the stock are -- in my experienced opinion -- not worth the electrons that generated them.

If, on the other hand, we saw the Chairman and CEO (or CFO, or GC) selling off almost ALL of their holdings (including unexpired vested stock options and SARs) -- and not under a pre-arranged plan -- I'd say it is worthy of note. But this? This is not. It is but a drop -- in the ocean.

Now you know.

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