A Form 4 filing filed with the SEC on Wednesday, April 14 showed that EVP Reddoch James F. sold 359 shares of Royalty Pharma Inc (NASDAQ:RPRX) at an average price of $42.32. The transaction moved the executive's stake in Royalty Pharma Inc. to 255,714 shares. Royalty Pharma was trading 2.8% higher from the previous closing price.

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.

Important Transaction Codes

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. If the transaction was an open-market transaction, that means that the insider made a conscious 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.