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The insiders of Dynavax Technologies Corporation (DVAX) made five separate insider sell transactions on September 13, 2012 - November 6, 2012 at $4.31 - $4.94 price range. Dynavax announced on November 15, 2012 that the U.S. Food and Drug Administration [FDA] Vaccines and Related Biological Products Advisory Committee voted eight to five with one abstention that there was insufficient data to adequately support the safety of Heplisav. On November 16, 2012 the stock tanked from $4.63 to $2.44.

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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 three stocks that met these three criteria of intensive insider selling in the last 30 days.

1. Plum Creek Timber Company (PCL) is a publicly owned real estate investment trust [REIT]. The trust owns and manages timberlands in the United States. Its products include lumber products, plywood, medium density fiberboard, and related by-products, such as wood chips. The trust also focuses on mineral extraction and natural gas production, communication, and transportation.

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Insider sells

  • Thomas Ray sold 5,000 shares on December 20, 2012 - January 15, 2013 pursuant to a Rule 10b5-1 trading plan adopted on 11/9/2012. Thomas Ray currently holds 14,404 shares or less than 0.1% of the company. Thomas Ray is Vice President, Northwest Resources and Manufacturing.
  • David Lambert sold 20,000 shares on January 2-15 pursuant to a Rule 10b5-1 trading plan adopted on 11/9/2012. David Lambert currently holds 33,115 shares or less than 0.1% of the company. David Lambert is Plum Creek's senior vice president and chief financial officer.
  • James Kilberg sold 20,500 shares on January 7-15 pursuant to a Rule 10b5-1 trading plan adopted on 11/9/2012. James Kilberg currently holds 31,515 shares or less than 0.1% of the company. James Kilberg was named Plum Creek's senior vice president, real estate in April 2006.
  • Larry Neilson sold 2,500 shares on January 2 pursuant to a Rule 10b5-1 trading plan adopted on 11/16/2012. Larry Neilson currently holds 29,216 shares or less than 0.1% of the company. Larry Neilson is senior vice president, resources and operations support at Plum Creek.
  • David Brown sold 10,000 shares on December 18 and currently holds 32,358 shares or less than 0.1% of the company. David Brown is vice president and chief accounting officer at Plum Creek.

Financials

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

Revenue$354 million
Net income$59 million
Cash$320 million
Debt$2.88 billion

Outlook

  • The company expects its full-year harvest to approximate 17.5 million tons.
  • During the fourth quarter, the company expects to harvest approximately 1 million tons in its Northern Resources segment and approximately 3 million tons in its Southern Resources segment.
  • Fourth quarter Real Estate segment sales are expected to be between $60 million and $80 million.
  • In the fourth quarter, seasonally lower sales volumes are expected to reduce the Manufacturing segment's profitability compared to the third quarter.
  • The company expects to report fourth quarter earnings between $0.25 and $0.30 per share.

Competition

Plum Creek's competitors include Louisiana-Pacific Corp. (LPX), Potlatch Corporation (PCH) and Weyerhaeuser Co. (WY). Here is a table comparing these companies.

CompanyPCLLPXPCHWYIndustry
Market Cap:7.60B2.81B1.66B16.49B177.10M
Employees:1,1923,90085312,800438.00
Qtrly Rev Growth (yoy):0.210.33-0.010.130.00
Revenue:1.30B1.57B491.76M6.67B279.99M
Gross Margin:0.290.150.220.170.23
EBITDA:381.00M115.60M85.69M1.10B3.81M
Operating Margin:0.210.030.120.100.03
Net Income:185.00M-73.80M27.25M307.00MN/A
EPS:1.14-0.550.680.57N/A
P/E:41.24N/A60.8653.6513.00
PEG (5 yr expected):17.9121.927.9917.6618.14
P/S:5.841.793.382.470.73

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

My analysis

The stock has met its $43 price target from the Point and Figure chart and is currently trading above the target price at $47. There have been 16 insider sell transactions and there have not been any insider buy transactions during the last 30 days. There are three analyst buy ratings, four neutral ratings and two sell ratings, with a average target price of $43.33. The stock is trading at a P/E ratio of 41.24 and a forward P/E ratio of 33.58. The company has a book value of $7.41 per share and the stock has a 3.57% dividend yield. Before shorting this stock, I would like to get a bearish confirmation from the Point and Figure chart. The three main reasons for the proposed short entry are bearish analyst estimates, high P/S ratio and the intensive insider selling activity.

2. Actuant Corporation (ATU) designs, manufactures, and distributes a range of industrial products and systems worldwide.

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Insider sells

  • Brian Kobylinski sold 38,800 shares on December 26, 2012 - January 11, 2013 and currently holds 112,572 shares or 0.2% of the company. Brian Kobylinski is Executive Vice President, Industrial Segment and China.
  • Gustav Boel sold 4,422 shares on January 2 pursuant to a 10b5-1 trading plan. Gustav Boel currently holds 63,952 shares or 0.1% of the company. Gustav Boel is Executive Vice President of the company.
  • Mark Goldstein sold 48,000 shares on December 24-26 pursuant to a 10b5-1 trading plan. Mark Goldstein currently holds 129,234 shares or 0.2% of the company. Mark Goldstein is Chief Operating Officer of the company.

Financials

The company reported the first quarter fiscal 2013, which ended November 30, 2012, financial results on December 19 with the following highlights:

Revenue$377.2 million
Net income$36.3 million
Net debt$328 million

Outlook

Robert C. Arzbaecher, Chairman and CEO of Actuant commented on December 19:

"The economic picture remains cloudy as we start the second quarter of fiscal 2013. Our customers remain cautious with ordering patterns, and most OEMs are continuing to reduce inventory by ordering at a slower pace than their end market sell-through levels. Although these conditions make organic growth more challenging in the near-term, we remain focused on investing for long-term growth through both G+I and acquisitions, as well as managing our costs and maintaining a strong balance sheet.

While we are seeing indications that market conditions are firming up in some areas, volatility and uncertainty also persist. At this point, our full year EPS guidance remains unchanged, yet we believe that the probability of attaining the high end of the range is low if current economic conditions and uncertainty continue. We expect fiscal 2013 sales to be approximately $1.600-1.625 billion, with core sales for the year down 1-3%.

We expect second quarter fiscal 2013 sales in the $360-370 million range and EPS of $0.34-0.38. The second quarter historically represents the seasonally weakest quarter of the fiscal year, and we expect to see the continued impact of economic uncertainty including customer inventory reductions, most notably in the Engineered Solutions segment. However, we are forecasting year-over-year sales growth in both the Industrial and Energy segments.

Consistent with our normal practice, the guidance excludes the impact of any future acquisitions and share repurchases. With our projected $200 million of fiscal 2013 free cash flow and strong capital structure, we are well positioned financially to fund both growth investments and opportunistic share buy-backs.

In summary, we continue to expect a challenging first half of fiscal 2013, followed by modest growth in the second half of the year. We remain confident in the fundamental strength of the Actuant businesses, have the right long-term growth strategies in place, and the operating experience to manage through the current environment."

Competition

Actuant's competitors include Kennametal (KMT) and Parker-Hannifin Corporation (PH). Here is a table comparing these companies.

CompanyATUKMTPHIndustry
Market Cap:2.08B3.29B13.29B1.24B
Employees:6,70012,93259,3312.78K
Qtrly Rev Growth (yoy):-0.04-0.05-0.010.13
Revenue:1.59B2.71B13.13B1.46B
Gross Margin:0.390.350.240.30
EBITDA:285.50M496.98M1.92B159.60M
Operating Margin:0.140.140.120.08
Net Income:86.46M281.63M1.09BN/A
EPS:1.163.467.110.79
P/E:24.6811.9312.5215.80
PEG (5 yr expected):0.881.272.341.24
P/S:1.321.221.020.86

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

My analysis

The stock has met its $27.5 price target from the Point and Figure chart and is currently trading above the target price at $28.5. There have been five 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 24.68 and a forward P/E ratio of 11.89. The company has a book value of $15.12 per share and the stock has a 0.12% dividend yield. Before shorting this stock, I would like to get a bearish confirmation from the Point and Figure chart. The three main reasons for the proposed short entry are weak company outlook, high P/S ratio and the intensive insider selling activity.

3. Synopsys (SNPS) provides core electronic design automation [EDA] solutions primarily in the United States, Europe, Japan, and the rest of Asia Pacific.

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Insider sells

  • Brian Beattie sold 17,500 shares on January 15 pursuant to a Rule 10b5-1 trading plan. Brian Beattie currently holds 20,130 shares or less than 0.1% of the company. Brian Beattie joined Synopsys as Chief Financial Officer in January 2006.
  • Roy Vallee sold 38,837 shares on December 11-19, 2012 and currently holds 45,780 shares or less than 0.1% of the company. Roy Vallee has been a member of the company's Board of Directors since February 2003.
  • Esfandiar Naddaf sold 4,213 shares on December 20, 2012 pursuant to a Rule 10b5-1 trading plan. Esfandiar Naddaf currently holds 2,249 shares or less than 0.1% of the company. Esfandiar Naddaf is Vice President, Controller.

Financials

The company reported the full fiscal year 2012, which ended October 31, 2012, financial results on December 5 with the following highlights:

Revenue$1.756 billion
Net income$182.4 million
Cash$700.4 million
Debt$135.0 million

Outlook

First Quarter of Fiscal Year 2013 Targets:

  • Revenue: $468 million - $478 million
  • GAAP earnings per share: $0.30 - $0.35

Full Fiscal Year 2013 Targets:

  • Revenue: $1.955 billion - $1.975 billion
  • GAAP earnings per share: $1.32 - $1.46

Competition

Synopsys' competitors include Cadence Design Systems (CDNS) and Mentor Graphics (MENT). Here is a table comparing these companies.

CompanySNPSCDNSMENTIndustry
Market Cap:4.90B3.96B1.85B172.21M
Employees:8,1384,7004,8001,000.00
Qtrly Rev Growth (yoy):0.160.160.070.06
Revenue:1.76B1.29B1.08B182.45M
Gross Margin:0.820.850.830.35
EBITDA:343.87M291.13M211.84M15.32M
Operating Margin:0.110.160.150.07
Net Income:182.40M136.97M134.81MN/A
EPS:1.210.491.190.02
P/E:26.8028.7213.8218.84
PEG (5 yr expected):1.621.040.781.04
P/S:2.803.021.711.30

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

My analysis

The stock has met its $31.5 price target from the Point and Figure chart and is currently trading above the target price at $32.5. 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 26.80 and a forward P/E ratio of 13.08. The company has a book value of $16.58 per share. Before shorting this stock, I would like to get a bearish confirmation from the Point and Figure chart. The two main reasons for the proposed short entry are high P/S ratio and the intensive insider selling activity.

Source: 3 Stocks With Recent Intensive Insider Selling