Form 4 funnies…

July 27, 2009

It’s always interesting to me when people study Form 4s intensely, trying to detect various patterns based on the sales and purchases made by top executives and directors. Various services, including the one I use most often — Insider Score — do a great job at parsing these filings. But I’m still not all that convinced that Form 4s are all that useful. How else to explain these four Form 4s that Medarex CEO and President Howard Pien filed during the first two weeks of July?

While I was on vacation last week, Medarex (MEDX) announced that it was being acquired by Bristol-Myers Squibb (BMY) for around $2.4 billion or $16 a share. On Wednesday, the day before the deal was announced, Medarex closed at $8.40 which makes for a nice payday. Unless you happened to sell the stock before the deal was announced like Pien did.

While we don’t yet know how long this deal has been in the works, it’s a pretty safe assumption that Pien knew the broad terms of BMY’s deal and the $16 a share price when he sold 34,000 shares at prices around $8.50 a share. Granted, the sales were part of a 10b5-1 plan, but the whole thing still seems a bit strange to us, especially given the fact that this appears to be a new trading plan for Pien.

So either this was very odd timing or it was designed to throw the scent off of a possible deal since it’s hard to believe anyone would set up a new plan to sell shares knowing the company would be acquired at a much higher price.

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