This Metric Says You Are Smart to Buy Merck & Co., Inc. (MRK)

Merck & Co., Inc. (NYSE:MRK) has had a consistently swell 2013, and the hits just keep on coming.


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Just as necessary, positive insider trading sentiment is another way to look at the world of equities. Just as you'd expect, there are a variety of incentives for a bullish insider to get rid of shares of his or her company, but just one, very obvious reason why they would buy. Many empirical studies have demonstrated the useful potential of this method if "monkeys" know where to look (learn more here).


Merck & Co., Inc. (NYSE:MRK)


Keeping this in mind, let's analyze the latest info for Merck & Co., Inc. (NYSE:MRK).

How have hedgies been trading Merck & Co., Inc. (NYSE:MRK)?


Heading into Q3, a total of 65 of the hedge funds we track were long in this stock, a change of 16% from one quarter earlier. With hedgies' positions undergoing their usual ebb and flow, there exists an "upper tier" of key hedge fund managers who were increasing their holdings considerably.


When using filings from the hedgies we track, Adage Capital Management, managed by Phill Gross and Robert Atchinson, holds the largest position in Merck & Co., Inc. (NYSE:MRK). Adage Capital Management has a $202.4 million position in the stock, comprising 0.6% of its 13F portfolio. On Adage Capital Management's heels is Samuel Isaly of OrbiMed Advisors, with a $191.6 million position; 4.1% of its 13F portfolio is allocated to the stock. Remaining hedge funds that are bullish include Cliff Asness's AQR Capital Management, John A. Levin's Levin Capital Strategies and Jerome Pfund and Michael Sjostrom's Sectoral Asset Management.


Consequently, particular hedge funds were leading the bulls' herd. Adage Capital Management, managed by Phill Gross and Robert Atchinson, established the largest position in Merck & Co., Inc. (NYSE:MRK). Adage Capital Management had 202.4 million invested in the company at the end of the quarter. Samuel Isaly's OrbiMed Advisors also made a $191.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Cliff Asness's AQR Capital Management, John A. Levin's Levin Capital Strategies, and Jerome Pfund and Michael Sjostrom's Sectoral Asset Management.

How have insiders been trading Merck & Co., Inc. (NYSE:MRK)?


Legal insider trading, particularly when it's bullish, is most useful when the primary stock in question has seen transactions within the past six months. Over the last half-year time frame, Merck & Co., Inc. (NYSE:MRK) has experienced zero unique insiders purchasing, and 4 insider sales (see the details of insider trades here).


We'll go over the relationship between both of these indicators in other stocks similar to Merck & Co., Inc. (NYSE:MRK). These stocks are Johnson & Johnson (NYSE:JNJ), Pfizer Inc. (NYSE:PFE), Novartis AG (ADR) (NYSE:NVS), GlaxoSmithKline plc (ADR) (NYSE:GSK), and Sanofi SA (ADR) (NYSE:SNY). This group of stocks are the members of the drug manufacturers - major industry and their market caps are closest to MRK's market cap.
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Company Name
# of Hedge Funds
# of Insiders Buying
# of Insiders Selling

Johnson & Johnson (NYSE:JNJ)
64
0
5

Pfizer Inc. (NYSE:PFE)
75
1
13

Novartis AG (ADR) (NYSE:NVS)
26
0
0

GlaxoSmithKline plc (ADR) (NYSE:GSK)
21
0
0

Sanofi SA (ADR) (NYSE:SNY)
52
0
0

Using the returns explained by Insider Monkey's tactics, average investors should always watch hedge fund and insider trading sentiment, and Merck & Co., Inc. (NYSE:MRK) is an important part of this process.


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