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The insiders of Mattress Firm Holding Corporation (NASDAQ:MFRM) made seven separate insider sell transactions on October 10, 2012 pursuant to a public offering at $28.51 share price. The company reported the third quarter fiscal 2012 financial results on December 4, 2012 and the stock tanked on the following day from $30.45 to $23.

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With this episode in mind, I decided to screen for stocks which have seen recent intensive insider selling.

Intensive insider selling can be defined by the following three criteria:

  1. The stock was sold by three or more insiders within one month.
  2. The stock was not purchased by any insiders in the month of intensive selling.
  3. At least two sellers decreased their holdings by more than 10 percent.

In this article, I will feature four stocks that met these three criteria of intensive insider selling in the last 30 days.

1. Mattress Firm Holding Corp. engages in the retail sale of mattresses, and related products and accessories in the United States.

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Insider sells

  • Bruce Levy sold 4,000 shares on January 14 and currently holds 30,983 shares or less than 0.1% of the company. Bruce Levy became Vice President of Real Estate and Construction in January 2009 to focus on continuing the company's nationwide expansion.
  • George McGill sold 10,000 shares on January 10 and currently holds 18,987 shares or less than 0.1% of the company. George McGill was promoted to Vice President of Field Operations in July 2009 from his previous position as Vice President of Operations, which he held from January 2007, until his promotion.
  • Frederick Tinsey sold 4,000 shares on January 4 and currently holds 30,206 shares or less than 0.1% of the company. Frederick Tinsey joined the company as a Director in August 2007, currently serving as chairman of audit Committee.

Financials

The company reported the third quarter fiscal 2012, which ended October 30, 2012, financial results on December 4 with the following highlights:

Revenue$277.3 million
Net income$12.5 million
Cash$10.9 million
Debt$228.3 million

Outlook

The company's guidance for the full fiscal year ending January 29, 2013 is as follows:

 FY2012
Revenue$1.010-$1.015 billion
GAAP EPS$1.18-$1.21

For the fourth fiscal quarter ending January 29, 2013, the company expects net sales in a range from $261 million to $266 million, GAAP EPS in a range from $0.23 to $0.26.

Competition

Mattress Firm's competitors include Costco Wholesale Corporation (NASDAQ:COST), Haverty Furniture Companies (NYSE:HVT) and Macy's (NYSE:M). Here is a table comparing these companies.

CompanyMFRMCOSTHVTMIndustry
Market Cap:872.90M43.72B381.22M14.66B229.19M
Employees:2,23096,0003,050171,0001.30K
Qtrly Rev Growth (yoy):0.510.100.110.040.00
Revenue:942.97M101.22B656.34M27.06B436.47M
Gross Margin:0.530.120.520.400.26
EBITDA:107.75M3.77B38.58M3.58B25.34M
Operating Margin:0.090.030.030.090.04
Net Income:49.65M1.80B25.09M1.35BN/A
EPS:1.494.111.113.230.20
P/E:17.3024.4015.5211.4916.28
PEG (5 yr expected):0.721.762.030.831.11
P/S:0.930.430.580.540.64

Mattress Firm is trading above the industry average P/S ratio, which could explain some of the insider selling.

My analysis

The stock has a $18 price target from the Point and Figure chart. There have been three insider sell transactions and there have not been any insider buy transactions during the last 30 days. The stock is trading at a P/E ratio of 17.30 and a forward P/E ratio of 13.19. The company has a book value of $7.64 per share. I believe there is an opportunity for a short entry with the $18 target price from the Point and Figure chart. I would place a stop loss at $34, which is the three month high and also above the 200 day moving average. The three main reasons for the proposed short entry are bearish Point and Figure chart, high P/S ratio and the intensive insider selling activity.

2. Yamana Gold (NYSE:AUY) is a Canadian-based gold producer with significant gold production, gold development stage properties, exploration properties, and land positions in Brazil, Argentina, Chile, Mexico and Colombia. Yamana plans to continue to build on this base through existing operating mine expansions, throughput increases, development of new mines, the advancement of its exploration properties and by targeting other gold consolidation opportunities with a primary focus in the Americas.

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Insider selling

  • Charles Main sold 22,324 shares on December 19, 2012 - January 11, 2013 and currently holds 146,747 shares or less than 0.1% of the company. Charles Main is Executive Vice President, Finance and Chief Financial Officer of the company.
  • Betty Soares sold 5,403 shares on December 19, 2012 - January 11, 2013 and currently holds 26,046 shares or less than 0.1% of the company. Betty Soares is Vice President, Corporate Controller and Chief Accounting Officer.
  • Sofia Tsakos sold 10,106 shares on December 18, 2012 - January 11, 2013 and currently holds 64,432 shares or less than 0.1% of the company. Sofia Tsakos is Senior Vice President, General Counsel and Corporate Secretary.
  • Jason LeBlanc sold 5,337 shares on December 18, 2012 - January 11, 2013 and currently holds 21,462 shares or less than 0.1% of the company. Jason LeBlanc is Vice President, Finance and Treasurer.
  • Greg McKnight sold 14,891 shares on December 18, 2012 - January 11, 2013 and currently holds 143,758 shares or less than 0.1% of the company. Greg McKnight is Senior Vice President, Business Development.
  • Patrick Portmann sold 3,424 shares on December 18, 2012 - January 10, 2013 and currently holds 3,173 shares or less than 0.1% of the company. Patrick Portmann is Vice President, Corporate Development.
  • Richard Campbell sold 1,759 shares on December 27, 2012 and currently holds 1,575 shares or less than 0.1% of the company. Richard Campbell is Senior Vice President, Human Resources.
  • Khawar Nasim sold 1,702 shares on December 27, 2012 and currently holds 1,632 shares or less than 0.1% of the company. Khawar Nasim is Vice President, External Affairs.
  • Elizabeth Doddridge sold 2,199 shares on December 27, 2012 and currently holds 3,568 shares or less than 0.1% of the company. Elizabeth Doddridge is Vice President, Corporate Communications and Investor Relations.
  • Dave Radu sold 2,111 shares on December 27, 2012 and currently holds 4,097 shares or less than 0.1% of the company. Dave Radu is Vice President, Information Technology.

Financials

The company reported the third-quarter financial results on October 29 with the following highlights:

Revenue$611.8 million
Net income$60.0 million
Cash$400 million
Gold production310,490 GEO

News

On January 9 the company reported the fourth quarter 2012 production of 322,800 gold equivalent ounces [GEO] and full year 2012 production of 1.2 million gold equivalent ounces [GEO].

Outlook

  • 20% production growth in 2013 to 1.44 - 1.60 M GEO
  • 33% production growth in 2014 to 1.60 - 1.77 M GEO

Competition

Yamana Gold's competitors include Goldcorp (NYSE:GG) and Kinross Gold (NYSE:KGC). Here is a table comparing these companies.

CompanyAUYGGKGCIndustry
Market Cap:13.08B30.08B10.84B19.74M
Employees:N/A14,5008,230114.00
Qtrly Rev Growth (yoy):0.100.180.070.66
Revenue:2.28B5.52B4.15B32.75M
Gross Margin:0.650.580.570.58
EBITDA:1.23B2.99B1.80B-887.88K
Operating Margin:0.380.410.290.03
Net Income:362.50M1.65B-2.33BN/A
EPS:0.481.88-2.03N/A
P/E:36.2719.74N/A14.71
PEG (5 yr expected):1.931.081.970.56
P/S:5.755.422.608.36

Yamana Gold is currently trading above the industry average P/E ratio, which could explain some of the insider selling.

My analysis

The stock has a $13 price target from the Point and Figure chart. There have been 10 different insiders selling and there have not been any insiders buying the shares during the past 30 days. The stock is trading at a P/E ratio of 36.27 and a forward P/E ratio of 12.44. The company has a book value of $10.22 per share and the stock has a 1.49% dividend yield. I believe there is an opportunity for a short entry with the $13 target price from the Point and Figure chart. I would place a stop loss at $20, which is the all time high. The three main reasons for the proposed short entry are high P/E ratio, bearish Point and Figure chart and the intensive insider selling activity. This trade would be against my own outlook for the gold mining sector.

3. KMG Chemicals (NYSE:KMG) engages in the manufacture, formulation, and distribution of specialty chemicals.

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Insider sells

  • John Sobchak sold 7,000 shares on January 8-9 and currently controls 57,664 shares or 0.5% of the company. John Sobchak is Vice President and CFO of the company.
  • Fred Leonard sold 30,641 shares on January 3-10 and currently holds 713,916 shares or 6.2% of the company. Fred Leonard serves as a director of the company.
  • David Hatcher sold 6,000 shares on January 10-11 and currently holds 2,165,994 shares or 18.8% of the company. David Hatcher serves as a director of the company.
  • Neal Butler sold 20,000 shares on December 21, 2012 - January 2, 2013 and currently holds 56,661 shares or 0.5% of the company. Mr. Neal Butler is a member of the Board of Directors and is President and CEO of the company.
  • Richard Urbanowski sold 5,000 shares on December 21, 2012 and currently holds 61,347 shares or 0.5% of the company. Richard Urbanowski serves as a director of the company.

Financials

The company reported the fiscal 2013 first quarter, which ended October 31, 2012, financial results on December 7 with the following highlights:

Revenue$65.3 million
Net income$4.1 million
Cash$4.2 million
Debt$22.0 million

Outlook

Neal Butler, President and CEO of KMG, commented on December 7:

"We expect demand for our electronic chemicals products to further decline in the second quarter as reported global semiconductor production slows from first quarter levels before strengthening in the second half of fiscal year 2013. Lower sales and production levels will also cause a decline in that segment's second quarter operating margins. In our Wood Treating Chemicals segment, we anticipate that second quarter sales volumes will decline from first quarter levels before strengthening in the second half of fiscal year 2013. These challenging economic conditions will likely cause our second quarter diluted earnings per share to be essentially in line with, or slightly below, last year's second quarter with expected improvement in the third fiscal quarter."

Mr. Butler concluded,

"Despite near-term challenges, we are optimistic on the outlook for fiscal 2013 and beyond given the opportunities that lie ahead. Backed by our strong balance sheet, we continue to pursue accretive acquisition opportunities, including the establishment of a new market platform by the end of fiscal 2014. We remain committed to generating long-term shareholder value through our proven consolidation strategy."

My analysis

The stock has a $13 price target from the Point and Figure chart. There have been five different insiders selling and there have not been any insiders buying the shares during the past 30 days. The stock is trading at a P/E ratio of 14.98 and a forward P/E ratio of 11.53. The company has a book value of $9.79 per share and the stock has a 0.63% dividend yield. I believe there is an opportunity for a short entry with the $13 target price from the Point and Figure chart. I would place a stop loss at $21, which is the three year high. The three main reasons for the proposed short entry are bearish Point and Figure chart, weak outlook for the fiscal 2013 second quarter and the intensive insider selling activity.

4. Pall Corporation (NYSE:PLL) engages in manufacturing and marketing filtration, purification, and separation products and integrated systems solutions worldwide.

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Insider sells

  • Michael Egholm sold 1,925 shares on January 10 and currently holds 0 shares of the company. Michael Egholm is Chief Technology Officer of the company.
  • Katharine Plourde sold 3,000 shares on January 2 and currently holds 1,000 shares or less than 0.1% of the company. Katharine Plourde serves as a director of the company.
  • Cheryl Grise sold 6,000 shares on December 21 and currently holds 1,000 shares or less than 0.1% of the company. Cheryl Grise serves as a director of the company.

Financials

The company reported the first quarter of fiscal year 2013, which ended on October 31, 2012, financial results on November 28 with the following highlights:

Revenue$627.6 million
Net income$339.5 million
Cash$909.7 million
Debt$619.2 million

Outlook

Larry Kingsley, Pall President and CEO, commented on November 28:

"As we factor in Q1 performance and our current order pattern, we expect Life Sciences to continue to perform well, while Industrial will have a difficult year. We believe we are taking a realistic approach to our sales forecast that could improve if emerging market demand returns. However, our customers remain very cautious and are allocating more of the current softening to end market requirements and not to de-stocking within the supply chain. Based on the order pattern and implied sales trend, we now expect pro forma EPS from continuing operations to be in the range of $2.95-$3.15."

My analysis

The stock has a $52 price target from the Point and Figure chart. There have been three different insiders selling and there have not been any insiders buying the shares during the past 30 days. The stock is trading at a P/E ratio of 24.61 and a forward P/E ratio of 18.20. The company has a book value of $15.87 per share and the stock has a 1.54% dividend yield. There are two analyst buy ratings, 7 neutral ratings and 0 sell ratings, with a average target price of $59.33. I believe there is an opportunity for a short entry with the $52 target price from the Point and Figure chart. I would place a stop loss at $69, which is above the all time high. The three main reasons for the proposed short entry are bearish Point and Figure chart, analyst target prices and the intensive insider selling activity. If the Point and Figure chart were to turn bullish, I would recommend closing the short position.

Source: 4 Stocks With Recent Intensive Insider Selling