Benzinga | Nov 30, 2020 11:54AM EST

Insider Sells Rockwell Automation's Stock



Shares of Rockwell Automation Inc (NYSE:ROK) moved lower by 1.3% from the previous closing price. Senior Vice President Donato Thomas filed a Form 4 with the SEC on Monday, November 30. The insider sold 1,500 shares at an average price of $255.00. After the transaction, the executive's stake in Rockwell Automation Inc. moved to 969 shares.

The Importance of Insider Transactions

Insider transactions shouldn't be used primarily to make an investing decision, however an insider transaction can be an important factor in the investing decision.

Insiders buying stock after a notable sell off can indicate an insider's long-term belief in the success of the company; insiders buying stock at new highs can be an indication the exec doesn't feel the stock is overvalued. Insiders who sell stock at new lows could be anticipating some capitulation moment. If the insider sells at new highs, it could point to the intention to "take some profit" and "lock in a gain."

Transaction Codes To Focus On

Investors prefer focusing on transactions which take place in the open market, indicated in the Form 4 with codes P for purchase and S for sale. If the transaction was an open-market transaction, that means that the insider made a concious decision for the company's stock moving forward.

Transaction codes other than P or S are often viewed with less conviction as they are often not tied to a decision by the exec. As an example, transaction code C indicates the conversion of an option. Transaction code A indicates the insider may have been forced to sell shares in order to receive compensation the exec was promised upon being hired by a company.