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.

For Second Time In 30 Days, Chairman & CEO Lightens Holdings Slightly, Via Pre-Arranged Plan Sales

At the end of the day yesterday, Mr. Frazier disclosed another near 10,000 share sale, bringing his total sales to close to 20,000 shares since June 10, 2014. Each of these were via cashless exercises of options, in each case options granted and vested many years ago -- they were relatively close to expiry date, in any event.

As we said then, however, since these are simply pre-set trading plan sales -- they do not reflect a view of any kind -- about Merck's current operations or prospects. As with all high executives at Merck, he is now likely over-invested (from a diversification standpoint) in Merck -- it is his career as well as his single largest investment (by asset class), in all likelihood. So this small diversification should not concern the market. Afterall, Mr. Frazier still owns over 341,000 Merck common shares outright (and holds the right to acquire several hundred thousand more, via options) -- after these transactions.

In fact, after the cashless exercises of a day or so ago (and the related partial sales) -- his net position has increased slightly -- by about 3,000 shares since June 10, 2014. He's up -- not down -- in total beneficial ownership of Merck stock. Trust that.