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There was intensive insider selling in Dollar General Corporation (DG) from November 27-29, 2012. The stock started trending down immediately after the intensive insider selling and was trading below $40 in the beginning of 2013.

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With this episode in mind, I decided to screen for stocks that 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 five stocks that met these three criteria of intensive insider selling in the last 30 days.

1. RF Industries (RFIL) engages in the design, manufacture, and/or sale of communications equipment primarily to the radio and other professional communications related industries in the United States and internationally.

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Insider sells

  • James Doss sold 71,643 shares on January 23 and currently holds 171,499 options or 2.4% of the company. James Doss is Secretary of the company.
  • John Waterfield sold 41,534 shares on January 23 and currently holds 0 shares of the company. John Waterfield serves as a director of the company.
  • Marvin Fink sold 12,100 shares on January 23-24 and currently holds 19,900 shares or 0.3% of the company. Marvin Fink is Chairman of the Board.

Financials

The company reported the fiscal year 2012, which ended October 31, financial results on January 22 with the following highlights:

Revenue$30.2 million
Net income$2.6 million
Cash$5.5 million

Outlook

Howard Hill, RFI's CEO, commented on January 22:

"We believe our solid balance sheet provides a firm foundation for future growth, and we are particularly encouraged by the first two months of Q1 2013 which point to strong growth and profitability for the quarter."

Competition

RF Industries' competitors include Amphenol (APH), Arris Group (ARRS) and Molex (MOLX). Here is a table comparing these companies.

CompanyRFILAPHARRSMOLXIndustry
Market Cap:40.82M10.86B1.90B2.25B155.14M
Employees:N/AN/A2,21134,2261.29K
Qtrly Rev Growth (yoy):0.770.210.300.130.08
Revenue:30.23M4.29B1.29B3.58B218.10M
Gross Margin:0.440.310.350.300.25
EBITDA:4.68M952.12M147.32M626.00M11.01M
Operating Margin:0.130.190.070.110.03
Net Income:2.61M555.32M-20.97M278.55MN/A
EPS:0.343.39-0.191.560.05
P/E:17.2119.97N/A17.6113.96
PEG (5 yr expected):N/A1.312.021.490.46
P/S:1.352.531.470.620.53

RF Industries 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. In 2011, there was only one insider sell transaction and one insider buy transaction. The stock is currently trading at a P/E ratio of 17.21 and a forward P/E ratio of 32.50. The company has a book value of $2.77 per share. Before entering short 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 relatively high P/S ratio and the intensive insider selling activity.

2. The Scotts Miracle-Gro Company (SMG) engages in manufacturing, marketing, and selling consumer lawn and garden care products.

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Insider sells

  • David Evans sold 3,480 shares on January 23 pursuant to a Rule 10b5-1 trading plan adopted on November 28, 2012. David Evans currently holds 42,799 shares or less than 0.1% of the company. David Evans was named executive vice president and chief financial officer in September 2006.
  • Barry Sanders sold 8,700 shares on January 23 pursuant to a Rule 10b5-1 trading plan adopted on February 21, 2012. Barry Sanders currently holds 19,784 shares or less than 0.1% of the company. Barry Sanders was appointed chief operating officer in 2012 and president of Scotts Miracle-Gro in 2010.
  • Denise Stump sold 5,000 shares on January 23 pursuant to a Rule 10b5-1 trading plan adopted on November 30, 2012. Denise Stump currently holds 24,303 shares or less than 0.1% of the company. Denise Stump was named executive vice president in February 2003. She is responsible for worldwide Human Resources strategy and execution.
  • James Hagedorn sold 237,305 shares on January 23 pursuant to a Rule 10b5-1 trading plan adopted on November 20, 2012. James Hagedorn currently holds 32,644 shares or less than 0.1% of the company. James Hagedorn was named chairman of the Board of Directors in January 2003 and chief executive officer in May 2001.
  • Vincent Brockman sold 5,000 shares on January 23 pursuant to a Rule 10b5-1 trading plan adopted on November 20, 2012. Vincent Brockman currently holds 19,784 shares or less than 0.1% of the company. Vincent Brockman was named executive vice president and general counsel in January 2008.

Financials

The company reported the fiscal year 2012, which ended September 30, 2012, financial results on November 8 with the following highlights:

Revenue$2.8 billion
Net income$106.5 million
Cash$131.9 million
Debt$782.6 million

Outlook

On December 14, 2012 the company announced its outlook for fiscal 2013.

  • The company said it expects company-wide net sales to increase by approximately 1 to 3 percent in fiscal 2013 on flat unit volume and improved pricing.
  • An anticipated improvement in gross margin rate, along with leverage from SG&A, is expected to result in adjusted earnings per share from continuing operations in the range of $2.50 to $2.75 for fiscal 2013.

Competition

Scotts Miracle-Gro's competitors include Central Garden & Pet Company (CENTA) and Spectrum Brands (SPB). Here is a table comparing these companies.

CompanySMGCENTASPBIndustry
Market Cap:2.80B459.28M2.58B2.15B
Employees:6,1003,4005,8501,000.00
Qtrly Rev Growth (yoy):-0.010.050.010.17
Revenue:2.83B1.70B3.25B3.96B
Gross Margin:0.340.300.350.28
EBITDA:312.70M110.45M447.89M401.53M
Operating Margin:0.090.040.110.09
Net Income:113.20M21.17M48.57MN/A
EPS:1.710.440.910.90
P/E:26.7021.4554.9713.68
PEG (5 yr expected):1.63N/A1.472.05
P/S:0.990.270.780.67

Scotts Miracle-Gro is trading above the industry average P/S ratio, which could explain some of the insider selling.

My analysis

There have been 22 insider sell transactions and there have not been any insider buy transactions during the last 30 days. The stock has not seen any insider buying since at least August 2012. There are 0 analyst buy ratings, six neutral ratings and one sell rating, with a average target price of $42.00. The stock is currently trading at a P/E ratio of 26.70 and a forward P/E ratio of 15.24. The company has a book value of $9.81 per share and the stock has a 2.84% 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. United Technologies Corporation (UTX) provides technology products and services to the building systems and aerospace industries worldwide.

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Insider sells

  • Alain Bellemare sold 10,000 shares on January 24 and currently holds 26,054 shares or less than 0.1% of the company. Alain Bellemare became president and chief executive officer of UTC Propulsion and Aerospace Systems on July 26, 2012.
  • Peter Longo sold 10,000 shares on January 24 and currently holds 18,131 shares or less than 0.1% of the company. Peter Longo serves as Vice President, Controller.
  • Louis Chênevert sold 9,830 shares on January 24 and currently holds 442,882 shares or less than 0.1% of the company. Louis Chênevert is Chairman & Chief Executive Officer of United Technologies Corporation.
  • Charles Gill sold 4,750 shares on January 24 and currently holds 10,382 shares or less than 0.1% of the company. Charles Gill is Senior Vice President and General Counsel of United Technologies Corporation. He was elected to this position in April 2007.
  • Geraud Darnis sold 35,241 shares on January 24 and currently holds 152,668 shares or less than 0.1% of the company. Geraud Darnis was named President & CEO of UTC Climate, Controls & Security in 2011.

Financials

The company reported the full year 2012 financial results on January 23 with the following highlights:

Revenue$57.7 billion
Net income$4.8 billion
Cash$4.8 billion
Debt$23.2 billion

Outlook

Louis Chênevert, UTC Chairman & Chief Executive Officer, commented on January 23:

"With broad based improvement in our order trends, and a continued focus on integration and execution, we remain confident in our ability to deliver 2013 earnings per share of $5.85 to $6.15. We continue to expect sales between $64 and $65 billion and cash flow from operations less capital expenditures to equal or exceed net income attributable to common shareowners in 2013."

Competition

United Technologies' competitors include Boeing (BA) and General Electric (GE). Here is a table comparing these companies.

CompanyUTXBAGEIndustry
Market Cap:80.73B56.58B232.86B267.08M
Employees:N/A171,700N/A2.19K
Qtrly Rev Growth (yoy):0.100.130.150.08
Revenue:57.71B78.95B147.36B779.59M
Gross Margin:0.270.170.120.30
EBITDA:8.26B7.73B28.74B48.95M
Operating Margin:0.120.080.120.06
Net Income:4.84B4.31B14.68BN/A
EPS:5.665.681.29N/A
P/E:15.8613.2117.2515.03
PEG (5 yr expected):1.221.411.211.00
P/S:1.390.721.561.26

United Technologies is trading above the industry average P/S ratio.

My analysis

There have been five insider sell transactions and there have not been any insider buy transactions during the last 30 days. There were 24 insider sell transactions and 0 insider buy transactions during 2012. The stock is trading at a P/E ratio of 15.86 and a forward P/E ratio of 14.87. The company has a book value of $27.22 per share and the stock has a 2.38% dividend yield. Before entering short this stock, I would like to get a bearish confirmation from the Point and Figure chart. The main reason for the proposed short entry is the intensive insider selling activity.

4. American Express Company (AXP) provides charge and credit payment card products and travel-related services to customers worldwide.

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Insider sells

  • James Bush sold 60,085 shares on January 23 and currently holds 55,223 shares or less than 0.1% of the company. James Bush is Executive Vice President, World Service.
  • Daniel Schulman sold 36,390 shares on January 23 and currently holds 18,857 shares or less than 0.1% of the company. Daniel Schulman is Group President, Enterprise Growth.
  • William Glenn sold 80,161 shares on January 22 and currently holds 37,532 shares or less than 0.1% of the company. William Glenn is President, Global Corporate Payments and Business Travel.
  • Stephen Squeri sold 54,210 shares on January 22 and currently holds 107,287 shares or less than 0.1% of the company. Stephen Squeri is Group President, Global Corporate Services.
  • Thomas Schick sold 190,654 shares on January 22 and currently holds 29,745 shares or less than 0.1% of the company. Thomas Schick is Executive Vice President, Corporate and External Affairs.
  • Edward Gilligan sold 132,899 shares on January 22 and currently holds 181,550 shares or less than 0.1% of the company. Edward Gilligan is Vice Chairman, American Express Company.

Financials

The company reported the full year 2012 financial results on January 17 with the following highlights:

Revenue$31.6 billion
Net income$4.5 billion
Cash$22 billion
Debt$62 billion

Competition

American Express' competitors include Discover Financial Services (DFS), Mastercard (MA) and Visa (V). Here is a table comparing these companies.

CompanyAXPDFSMAVIndustry
Market Cap:65.75B19.47B64.54B106.95B168.71M
Employees:63,500N/A6,7008,500652.00
Qtrly Rev Growth (yoy):0.020.300.060.150.20
Revenue:29.59B7.84B7.22B10.42B68.82M
Gross Margin:0.760.871.000.960.88
EBITDA:N/AN/A4.06B6.57B13.59M
Operating Margin:0.230.480.530.600.31
Net Income:4.43B2.32B2.17B2.14BN/A
EPS:3.894.4617.083.160.48
P/E:15.308.7630.4150.5812.22
PEG (5 yr expected):1.150.841.301.201.04
P/S:2.212.498.9810.252.48

American Express' gross margin is below the industry average.

My analysis

There have been six insider sell transactions and there have not been any insider buy transactions during the last 30 days. In 2012, there were 20 insider sell transactions and one insider buy transaction. The stock is trading at a P/E ratio of 15.30 and a forward P/E ratio of 11.21. The company has a book value of $17.36 per share and the stock has a 1.34% dividend yield. Before entering short this stock, I would like to get a bearish confirmation from the Point and Figure chart. The main reason for the proposed short entry is the intensive insider selling activity.

5. State Street Corporation (STT), a financial holding company, provides various financial products and services to institutional investors worldwide.

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Insider selling

  • John Klinck sold 21,841 shares on January 23 and currently holds 136,508 shares or less than 0.1% of the company. John Klinck is executive vice president and global head of State Street's Corporate Development, Global Relationship Management and Data and Analytics Solutions groups.
  • James Phalen sold 71,600 shares on January 23 and currently holds 371,410 shares or less than 0.1% of the company. James Phalen is executive vice president and head of Global Operations, Technology and Product Development.
  • Alison Quirk sold 2,907 shares on January 22 and currently holds 82,588 shares or less than 0.1% of the company. Alison Quirk is an executive vice president at State Street Corporation and is Chief Human Resources and Citizenship Officer.

Financials

The company reported the full year 2012 financial results on January 18 with the following highlights:

Revenue$9.6 billion
Net income$2.0 billion

Competition

State Street's competitors include The Bank of New York Mellon (BK), JPMorgan Chase & Co. (JPM) and Northern Trust (NTRS). Here is a table comparing these companies.

CompanySTTBKJPMNTRSIndustry
Market Cap:25.89B31.51B191.74B12.26B69.13M
Employees:N/A49,500N/A14,200161.00
Qtrly Rev Growth (yoy):0.060.050.190.020.10
Revenue:9.57B14.64B93.65B3.87B29.65M
Gross Margin:N/AN/AN/AN/A0.00
EBITDA:N/AN/AN/AN/AN/A
Operating Margin:0.310.290.320.260.29
Net Income:2.02B2.40B21.28B677.30MN/A
EPS:4.202.035.202.810.79
P/E:13.4413.349.0718.2613.51
PEG (5 yr expected):2.550.901.371.432.01
P/S:2.662.152.013.142.71

State Street's P/S ratio is in-line with the industry average.

My analysis

There have been three insider sell transactions and there have not been any insider buy transactions during the last 30 days. In 2012, there were 10 insider sell transactions and 0 insider buy transactions. There are seven analyst buy ratings, seven neutral ratings and two sell ratings, with a average target price of $50.70. The stock is trading at a P/E ratio of 13.44 and a forward P/E ratio of 11.52. The company has a book value of $44.25 per share and the stock has a 1.70% dividend yield. Before entering short 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 bearish analyst target prices and the intensive insider selling activity.

Source: 5 Stocks With Recent Intensive Insider Selling