A Form 4 filing filed with the SEC on Wednesday, September 9 showed that President Hobart Lauren R sold 51,041 shares of Dick's Sporting Goods Inc (NYSE:DKS) at an average price of $54.33. The transaction moved the executive's stake in Dick's Sporting Goods Inc. to 166,665 shares. Shares of Dick's Sporting Goods rose by 0.7% from the previous closing price.
The Importance of Insider Transactions
While transactions from an insider shouldn't be used as the sole item to make an investment or trading decision, an insider buying or selling stock in their company can be a good added factor that leads to more conviction in a decision.
When an insider buys stock after an important sell off, that can indicate the insider's faith in the success of the organization. Henceforth, if the stock is bought at new highs, it might be because the insider feels that the stock is not overvalued. Conversely, insiders who are selling stock at new lows can potentially indicate some kind of capitulation moment. Insiders selling at new highs can indicate that exec wants to "take some profit" and "lock in a gain."
Transaction Codes To Focus On
Wall Street tends to focus on insider transactions which take place in the open market, viewed inside a Form 4 filing via codes P for purchase and S for sale. An open-market transaction means the insider went into the market of their own volition and made an active decision about the potential path for a company and its stock moving forward.
Transaction codes besides P or S aren't relatively important as they are seldom tied to a decision by the executive. For example, transaction code A is indicative of an insider being forced to sell shares to attain compensation. Moreover, transaction code C indicates the conversion of an option.