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There was intensive insider selling in Apple (NASDAQ:AAPL) from July 30, 2012 to August 31, 2012. The stock peaked at $701.86 on September 21, 2012 just 21 days after the intensive insider selling. Currently, the stock is trading at $500.


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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. Exlservice Holdings (NASDAQ:EXLS) provides outsourcing and transformation services primarily in the United States and the United Kingdom.


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Insider sells

  • Vikram Talwar sold 142,874 shares on January 8-16 pursuant to a 10b5-1 plan. Vikram Talwar currently controls 137,500 shares or 0.4% of the company. Vikram Talwar is Chairman of the Board.
  • Amit Shashank sold 6,000 shares on January 9 pursuant to a 10b5-1 plan. Amit Shashank currently holds 10,113 shares or less than 0.1% of the company. Amit Shashank is the General Counsel and Corporate Secretary of the company.
  • Vishal Chhibbar sold 7,200 shares on January 7-9 pursuant to a 10b5-1 plan. Vishal Chhibbar currently controls 76,568 shares or 0.2% of the company. Vishal Chhibbar is Executive Vice President and Chief Financial Officer.

Financials

The company reported the third-quarter financial results on November 2 with the following highlights:

Revenue $112.6 million
Net income $11.7 million
Cash & investments $125.4 million

Outlook

The company's guidance for calendar year 2012:

  • Revenue of $442 million to $444 million.
  • Adjusted diluted earnings per share, excluding the impact of stock-based compensation expense, amortization of intangibles and associated tax impacts, of $1.54 to $1.57.

Competition

Exlservice's competitors include Accenture (NYSE:ACN), Genpact (NYSE:G) and WNS (Holdings) (NYSE:WNS). Here is a table comparing these companies.

Company EXLS ACN G WNS Industry
Market Cap: 953.13M 45.17B 3.73B 614.51M 278.70M
Employees: 18,900 259,000 60,800 25,931 830.00
Qtrly Rev Growth (yoy): 0.13 0.02 0.14 0.03 0.15
Revenue: 427.86M 28.01B 1.84B 454.42M 181.59M
Gross Margin: 0.38 0.32 0.39 0.32 0.38
EBITDA: 81.11M 4.27B 325.20M 76.99M 22.50M
Operating Margin: 0.13 0.14 0.14 0.08 0.07
Net Income: 39.23M 2.61B 185.93M 17.66M N/A
EPS: 1.19 3.61 0.82 0.35 0.11
P/E: 24.94 19.44 20.29 35.00 23.79
PEG (5 yr expected): 1.06 1.49 1.19 0.77 1.17
P/S: 2.22 1.61 2.02 1.36 1.85

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

My analysis

There have been six 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 0 sell ratings, with a average target price of $30.00. The stock is trading at a P/E ratio of 24.94 and a forward P/E ratio of 16.38. The company has a book value of $10.42 per share. Before entering short 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 relatively high P/S ratio, relatively high P/E ratio and the intensive insider selling activity.

2. Worthington Industries (NYSE:WOR) operates as a diversified metals processing company that focuses on steel processing and manufactured metal products in the United States, Canada, Europe, and internationally.


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Insider sells

  • Catherine Lyttle sold 2,104 shares on January 17 and currently holds 11,610 shares or less than 0.1% of the company. Catherine Lyttle is Vice President Corporate Communications & Investor Relations Worthington Industries.
  • Dale Brinkman sold 6,500 shares on January 9 and currently holds 37,542 shares or less than 0.1% of the company. Dale Brinkman joined Worthington in 1982 as general counsel and was named vice president administration in 1999, and secretary of the corporation in September 2000.
  • Eric Smolenski sold 3,000 shares on January 8 and currently holds 17,545 shares or less than 0.1% of the company. In February 2012, Eric Smolenski was named chief information officer. In this role, he leads Worthington Industries' Information Technology group.
  • Matthew Lockard sold 20,000 shares on January 4 and currently holds 11,271 shares or less than 0.1% of the company. Matthew Lockard was named Treasurer of Worthington Industries in February 2009.

Financials

The company reported the fiscal 2013 second quarter, which ended November 30, 2012, financial results on January 3 with the following highlights:

Revenue $622.6 million
Net income $31.8 million
Cash $32.9 million
Debt $452.0 million

Outlook

John McConnell, Chairman and CEO of Worthington Industries, commented on January 3:

"We expect to see the normal seasonality in our traditional markets in the third quarter. We do think that the delay by lawmakers in addressing the country's fiscal crisis has resulted in a pullback in some areas of the economy. While this may impact some of our cyclical businesses, we continue to anticipate good performance in our higher growth cylinder operations serving retail, alternative fuels and energy markets. Our strategy to optimize our businesses continues across the Company as the Transformation takes hold in Pressure Cylinders and is moving into the Engineered Cabs facilities. We anticipate improvements in both of these businesses over the next several quarters. We will also continue to look for other opportunities to grow the Company organically and through new businesses."

Competition

Worthington Industries' competitors include AK Steel Holding Corporation (NYSE:AKS) and Gibraltar Industries (NASDAQ:ROCK). Here is a table comparing these companies.

Company WOR AKS ROCK Industry
Market Cap: 1.96B 511.11M 521.45M 312.40M
Employees: 10,500 6,600 2,221 1.09K
Qtrly Rev Growth (yoy): 0.10 -0.08 -0.07 0.22
Revenue: 2.66B 6.02B 791.56M 1.04B
Gross Margin: 0.15 0.06 0.19 0.21
EBITDA: 205.24M 223.40M 65.82M 71.93M
Operating Margin: 0.05 0.00 0.05 0.07
Net Income: 143.75M -986.90M 9.53M N/A
EPS: 2.07 -8.97 0.32 0.26
P/E: 13.47 N/A 52.31 12.44
PEG (5 yr expected): 2.33 -0.32 3.39 1.30
P/S: 0.74 0.09 0.65 0.51

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

My analysis

There have been four insider sell transactions and there have not been any insider buy transactions during the last 30 days. There are two analyst buy ratings, five neutral ratings and 0 sell ratings, with a average target price of $21.17. The stock is trading at a P/E ratio of 13.47 and a forward P/E ratio of 12.42. The company has a book value of $11.23 per share and the stock has a 1.87% dividend yield. Before entering short 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 relatively high P/S ratio, bearish analyst target prices and the intensive insider selling activity.

3. Verisk Analytics (NASDAQ:VRSK) provides proprietary data, analytics methods, and embedded decision support solutions for detecting fraud in property and casualty (P&C) insurance, mortgage, and healthcare industries primarily in the United States.


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Insider sells

  • Vincent Cialdella sold 15,000 shares on January 18 pursuant to a 10b5-1 plan. Vincent Cialdella currently holds 65,908 shares or less than 0.1% of the company. Vincent Cialdella is president - Verisk Insurance Solutions - Claims and Crime Analytics.
  • Mark Anquillare sold 40,000 shares on January 10 pursuant to a 10b5-1 plan. Mark Anquillare currently holds 21,408 shares or less than 0.1% of the company. Mark Anquillare, executive vice president and chief financial officer, is responsible for Verisk's financial processes and systems, financial analysis, accounting, and treasury functions.
  • Frank Coyne sold 200,000 shares on December 20, 2012 - January 7, 2013 pursuant to a 10b5-1 plan. Frank Coyne currently holds 228,711 shares or 0.1% of the company. Frank Coyne is chairman and CEO of Verisk Analytics.

Financials

The company reported the third-quarter financial results on October 30 with the following highlights:

Revenue $398.9 million
Net income $82.9 million
Cash $102.7 million
Debt $1.57 billion

Competition

Here is a table comparing Verisk Analytics to the business services industry.

Company VRSK Industry
Market Cap: 9.10B 278.70M
Employees: 5,200 830.00
Qtrly Rev Growth (yoy): 0.17 0.15
Revenue: 1.47B 181.59M
Gross Margin: 0.61 0.38
EBITDA: 657.44M 22.50M
Operating Margin: 0.39 0.07
Net Income: 311.16M N/A
EPS: 1.81 0.11
P/E: 30.14 23.79
PEG (5 yr expected): 1.92 1.17
P/S: 6.11 1.85

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

My analysis

There have been three insider sell transactions and there have not been any insider buy transactions during the last 30 days. There are 10 analyst buy ratings, one neutral rating and 0 sell ratings, with a average target price of $48.00. The stock is trading at a P/E ratio of 29.99 and a forward P/E ratio of 23.94. The company has a book value of $0.85 per share. Before entering short 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 high P/E ratio, bearish analyst target prices and the intensive insider selling activity.

4. PPG Industries (NYSE:PPG) manufactures and supplies protective and decorative coatings.


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Insider sells

  • Charles Bunch sold 100,000 shares on January 16 and currently holds 285,465 shares or 0.2% of the company. Charles Bunch is chairman of the board and chief executive officer of PPG Industries.
  • David Whitwam sold 2,500 shares on January 16 and currently holds 0 shares of the company. David Whitwam serves as a director of the company.
  • Rich Alexander sold 56,800 shares on January 16 and currently holds 23,840 shares or less than 0.1% of the company. Rich Alexander is Executive Vice President of the company.

Financials

The company reported the full year 2012 financial results on January 14 with the following highlights:

Revenue $15.2 billion
Net income $941 million
Cash $2.4 billion
Debt $4.0 billion

Competition

Here is a table comparing PPG to the specialty chemicals industry.

Company PPG Industry
Market Cap: 21.89B 473.83M
Employees: N/A 379.00
Qtrly Rev Growth (yoy): 0.04 0.08
Revenue: 15.20B 890.00M
Gross Margin: 0.40 0.27
EBITDA: 2.34B 79.40M
Operating Margin: 0.12 0.08
Net Income: 941.00M N/A
EPS: 6.06 1.26
P/E: 23.55 15.46
PEG (5 yr expected): 2.06 1.74
P/S: 1.43 0.75

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

My analysis

The stock has met its $139 price target from the Point and Figure chart and is currently trading at $142.73. There have been three insider sell transactions and there have not been any insider buy transactions during the last 30 days. There are 12 analyst buy ratings, six neutral ratings and 0 sell ratings, with a average target price of $109.67. The stock is trading at a P/E ratio of 23.55 and a forward P/E ratio of 15.97. The company has a book value of $25.17 per share and the stock has a 1.65% dividend yield. Before entering short 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 relatively high P/S ratio, bearish analyst target prices and the intensive insider selling activity.

Source: 4 Stocks With Recent Intensive Insider Selling