Recent insider trends for Merck & Co., Inc. (NYSE:MRK) have caught the attention of investors. Insider activity is often a strong indicator of future performance in a stock, and if the data on MRK is anything to go by, investors should pay attention.
Institutions own 73.79% of Merck & Co., Inc. (MRK)’s shares. The total value of these holdings, in millions, is $122,992. Among active positions in the latest quarter, 854 holders increased their positions by a total of 83.35 million shares, 878 holders decreased the positions by a total of 69.23 million shares, and 257 holders held their positions. This works out to a net increase in ownership of 14.12 million shares, and suggests that institutions are feeling bullish about the stock.
Among new and sold out positions, 84 holders initiated new positions by a total of 12.83 million shares and 70 holders exited their positions by a total of 4.76 million shares. This nets out to an increase of 8.07 million shares and is a bullish sign for MRK.
In the last three months, insiders executed a total of 7 trades. 7 were sells. Insider ownership decreased by a total of 184852 shares, which suggests that MRK’s key executives are feeling less optimistic about the outlook for the stock. The data from the past twelve months tells a similar story: insiders executed 11 buys and 22 sells, and ownership decreased by a net of 203490 shares.
The analysis of insider buying and selling trends can be extended to the aggregate level. Short interest, which represents the number of a stock’s shares currently being shorted, captures what the market as a whole feels about a stock. Merck & Co., Inc. (NYSE:MRK)’s short interest is 24.09 million shares, or % of the float. This represents an increase of 11% in the number of shares being shorted compared to the previous reading, and implies that investors felt more pessimistic about the stock during the past two weeks.
Ownership trends and trading patterns can be useful tools for predicting a stock’s performance, but it’s also important to consider the technicals in order to form a more comprehensive view. A composite of 13 technical indicators that includes measures such as moving averages and momentum oscillators suggests that MRK is a buy, which implies that MRK is expected to outperform the market based on prior trading patterns.
Institutional ownership trends suggest that the stock is cheap and the insider trading data indicates that insiders are bearish. Technical indicators (also) suggest that Merck & Co., Inc. (NYSE:MRK) is undervalued.