5 Stocks With Recent Intensive Insider Selling

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 |  Includes: AVGO, BMRN, CAH, EBAY, VAR
by: Markus Aarnio

There was intensive insider selling in Skyworks Solutions (NASDAQ:SWKS) from August 3, 2012 to September 14, 2012. The stock peaked at $31.44 on September 7, 2012. On September 20, 2012, the company updated its revenue and earnings outlook and the stock tanked to $23. The stock traded as low as $19.21 on November 5, 2012.

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Here is a table of Skyworks' insider trading activity by calendar month.

Month Insider selling / shares Insider buying / shares
January 2013 0 0
December 2012 15,000 0
November 2012 0 0
October 2012 0 0
September 2012 136,619 0
August 2012 472,614 0
July 2012 463,701 0
June 2012 289,327 0
May 2012 199,500 0
April 2012 0 0
March 2012 57,000 0
February 2012 132,439 0
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By looking at this table, we can see that the insider selling in Skyworks peaked just before the stock tanked. 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 five stocks that met these three criteria of intensive insider selling in the last 30 days.

1. Varian Medical Systems (NYSE:VAR) designs, manufactures, sells, and services medical devices and software for treating cancer with radiotherapy, radiosurgery, proton therapy, and brachytherapy worldwide.

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Insider selling by insider (last 30 days)

  • Ruediger Naumann-Etienne sold 5,000 shares on January 28 and currently holds 0 shares of the company. Ruediger Naumann-Etienne has been a director of the company since 2003.
  • John Kuo sold 1,716 shares on January 11-14 pursuant to a Rule 10b5-1 trading plan. John Kuo currently holds 9,368 shares or less than 0.1% of the company. John Kuo was named Corporate Vice President, General Counsel and Secretary for Varian Medical Systems in 2005.
  • Kolleen Kennedy sold 2,803 shares on January 7-14 pursuant to a Rule 10b5-1 trading plan. Kolleen Kennedy currently holds 10,719 shares or less than 0.1% of the company. Kolleen Kennedy was named corporate senior vice president as well as president of Varian's Oncology Systems business in October, 2011.
  • Robert Kluge sold 96,167 shares on January 3-7 pursuant to a Rule 10b5-1 trading plan. Robert Kluge currently holds 28,211 shares or less than 0.1% of the company. Robert Kluge is corporate senior vice president and president of the X-Ray Products business.
  • Elisha Finney sold 10,000 shares on January 2-7 pursuant to a Rule 10b5-1 trading plan. Elisha Finney currently holds 6,899 shares or less than 0.1% of the company. Elisha Finney was named vice president, finance and CFO of Varian Medical Systems in April, 1999.

Insider selling by calendar month

Here is a table of Varian Medical Systems' insider trading activity by calendar month.

Month Insider selling / shares Insider buying / shares
January 2013 115,686 0
December 2012 187,935 0
November 2012 87,475 0
October 2012 191,477 0
September 2012 5,900 0
August 2012 47,585 0
July 2012 4,000 0
June 2012 4,000 0
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From this table we can see that the insider selling in January 2013 has been the third highest since June 2012.

Financials

The company reported the first quarter fiscal year 2013, which ended December 28, 2012, financial results on January 23 with the following highlights:

Revenue $678 million
Net income $95 million
Cash $755 million
Debt $206 million
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Outlook

Dow R. Wilson, CEO of Varian Medical Systems, commented on January 23:

"We are pleased with our first quarter results in revenues and earnings, which should keep the company on track for hitting its fiscal 2013 growth targets. We remain confident in the fundamental long-term strategy for serving our markets. For the second quarter of fiscal year 2013, total company revenues could increase by about 5 to 6 percent over the prior year quarter. With the balance of restructuring charges from the enhanced retirement program, net earnings per diluted share for the second quarter should be in the range of $0.98 to $1.03. For the fiscal year, we continue to believe that total company revenues could increase by about 8 to 9 percent over the prior fiscal year. Net earnings per diluted share for the fiscal year could be in the range of $4.08 to $4.16."

Competition

Varian Medical Systems' competitors include Accuray (NASDAQ:ARAY). Here is a table comparing these two companies.

Company VAR ARAY Industry
Market Cap: 7.84B 368.59M 96.17M
Employees: 6,200 1,100 315.00
Qtrly Rev Growth (yoy): 0.09 -0.18 0.16
Revenue: 2.86B 391.52M 47.86M
Gross Margin: 0.43 0.35 0.57
EBITDA: 667.92M -29.77M 834.00K
Operating Margin: 0.21 -0.16 0.02
Net Income: 432.15M -69.66M N/A
EPS: 3.83 -0.98 N/A
P/E : 18.70 N/A 21.50
PEG (5 yr expected): 1.51 0.03 1.28
P/S: 2.74 0.94 2.76
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Varian Medical Systems' P/S ratio is in-line with the industry average.

My analysis

There have been eight insider sell transactions and there have not been any insider buy transactions during the last 30 days. There are 12 analyst buy ratings, five neutral ratings and one sell ratings, with a average target price of $70.67. The stock is trading at a P/E ratio of 18.70 and a forward P/E ratio of 15.52. The company has a book value of $14.44 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 bearish analyst price targets and the intensive insider selling activity.

2. eBay (NASDAQ:EBAY) provides online platforms, services, and tools to help individuals and merchants in online and mobile commerce and payments in the United States and internationally.

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Insider selling by insider (last 30 days)

  • Fred Anderson sold 40,120 shares on January 25 and currently holds 6,000 shares or less than 0.1% of the company. Fred Anderson has served as a director of eBay since July 2003.
  • Robert Swan sold 254,850 shares on January 22-24 pursuant to a Rule 10b5-1 trading plan. Robert Swan currently holds 308,803 shares or less than 0.1% of the company. Robert Swan is Senior Vice President, Finance and Chief Financial Officer of eBay.
  • Mark Carges sold 200,000 shares on January 23 and currently holds 69,228 shares or less than 0.1% of the company. Mark Carges is Chief Technology Officer and Senior Vice President, Global Products, Marketplaces.
  • Alan Marks sold 31,237 shares on January 22 and currently holds 47,626 shares or less than 0.1% of the company. Alan Marks is Senior Vice President, Corporate Communications of eBay.
  • John Donahoe sold 250,000 shares on January 22 pursuant to a Rule 10b5-1 trading plan. John Donahoe currently holds 360,132 shares or less than 0.1% of the company. John Donahoe is President and Chief Executive Officer of eBay.

Insider selling by calendar month

Here is a table of eBay's insider trading activity by calendar month.

Month Insider selling / shares Insider buying / shares
January 2013 776,207 0
December 2012 1,250 0
November 2012 241,967 0
October 2012 94,686 0
September 2012 13,750 0
August 2012 170,356 0
July 2012 1,396,802 0
June 2012 1,250 0
May 2012 61,250 0
April 2012 150,632 0
March 2012 7,250 0
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From this table we can see that the insider selling in January 2013 has been the highest since July 2012.

Financials

The company reported the full year 2012 financial results on January 16 with the following highlights:

Revenue $14.1 billion
Net income $2.6 billion
Cash $11.5 billion
Debt $4.5 billion
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Outlook

  • First quarter 2013 - eBay expects net revenues in the range of $3,650-$3,750 million with GAAP earnings per diluted share in the range of $0.48-$0.50 and non-GAAP earnings per diluted share in the range of $0.60-$0.62.
  • Full year 2013 - eBay expects net revenues in the range of $16,000-$16,500 million with GAAP earnings per diluted share in the range of $2.23-$2.29 and non-GAAP earnings per diluted share in the range of $2.70-$2.75.

Competition

eBay's competitors include Amazon.com (NASDAQ:AMZN), Google (NASDAQ:GOOG) and Overstock.com (NASDAQ:OSTK). Here is a table comparing these companies.

Company EBAY AMZN GOOG OSTK Industry
Market Cap: 71.42B 123.94B 248.28B 386.88M 350.29M
Employees: N/A 56,200 N/A 1,300 1.30K
Qtrly Rev Growth (yoy): 0.18 0.27 0.36 0.07 0.15
Revenue: 14.07B 57.26B 50.18B 1.07B 475.30M
Gross Margin: 0.70 0.24 0.59 0.18 0.36
EBITDA: 4.09B 2.09B 15.72B 17.95M 17.95M
Operating Margin: 0.21 0.01 0.25 0.00 -0.00
Net Income: 2.61B 40.00M 10.79B 2.47M N/A
EPS: 1.99 0.08 32.31 0.10 -0.30
P/E: 27.73 3,257.38 23.33 161.76 27.88
PEG (5 yr expected): 1.38 -244.00 1.16 1.45 0.41
P/S: 5.08 2.16 4.95 0.36 1.14
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eBay 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 25 analyst buy ratings, 13 neutral ratings and 0 sell ratings, with a average target price of $51.85. The stock is trading at a P/E ratio of 27.73 and a forward P/E ratio of 17.25. The company has a book value of $15.38 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/S ratio, bearish analyst price targets and the intensive insider selling activity.

3. Broadcom Corporation (BRCM) designs and develops semiconductor solutions for wired and wireless communications.

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Insider selling by insider (last 30 days)

  • Scott McGregor sold 60,000 shares on January 8-22 pursuant to a Rule 10b5-1 sales plan. Scott McGregor currently holds 1,084,913 shares or 0.2% of the company. Scott McGregor serves as President and Chief Executive Officer of Broadcom.
  • Terri Timberman sold 11,000 shares on January 2-16 pursuant to a Rule 10b5-1 sales plan. Terri Timberman currently holds 134,337 shares or less than 0.1% of the company. Terri Timberman serves as Executive Vice President, Global Human Resources for Broadcom.
  • Arthur Chong sold 88,021 shares on December 30, 2012 - January 16, 2013 pursuant to a Rule 10b5-1 sales plan. Arthur Chong currently holds 222,927 shares or less than 0.1% of the company. Arthur Chong serves as Executive Vice President, General Counsel and Secretary of Broadcom.
  • Neil Kim sold 43,529 shares on January 10-16 pursuant to a Rule 10b5-1 sales plan. Neil Kim currently holds 136,502 shares or less than 0.1% of the company. Neil Kim serves as Executive Vice President, Operations and Central Engineering of Broadcom.
  • John Major sold 1,000 shares on January 16 pursuant to a Rule 10b5-1 sales plan. John Major currently holds 26,165 shares or less than 0.1% of the company. John Major has been a director of Broadcom since January 2003.
  • Henry Samueli sold 50,000 shares on January 2-16 pursuant to a Rule 10b5-1 sales plan. Henry Samueli currently holds 196,669 shares or less than 0.1% of the company. Dr. Henry Samueli is a Co-Founder of Broadcom and serves as Chairman of the Board and Chief Technical Officer.

Insider selling by calendar month

Here is a table of Broadcom's insider trading activity by calendar month.

Month Insider selling / shares Insider buying / shares
January 2013 250,534 0
December 2012 410,000 0
November 2012 588,000 0
October 2012 230,500 0
September 2012 271,400 0
August 2012 140,053 0
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Broadcom has seen steady insider selling during the past six months.

Financials

The company reported the full year 2012 financial results on January 29 with the following highlights:

Revenue $8.0 billion
Net income $719 million
Cash $2.4 billion
Debt $1.7 billion
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Competition

Broadcom's competitors include Infineon Technologies (OTCQX:IFNNY), Qualcomm (NASDAQ:QCOM) and Texas Instruments (NASDAQ:TXN). Here is a table comparing these companies.

Company BRCM IFNNY QCOM TXN Industry
Market Cap: 19.29B 9.65B 109.74B 36.67B 440.45M
Employees: 9,590 26,658 26,600 N/A 929.00
Qtrly Rev Growth (yoy): 0.09 -0.05 0.18 -0.13 0.13
Revenue: 7.55B 5.05B 19.12B 12.82B 192.73M
Gross Margin: 0.49 0.37 0.63 0.50 0.45
EBITDA: 1.16B 1.20B 6.66B 3.99B 13.92M
Operating Margin: 0.10 0.13 0.30 0.21 0.04
Net Income: 722.00M 559.31M 5.33B 1.76B N/A
EPS: 1.28 0.50 3.51 1.51 N/A
P/E: 26.79 17.75 18.37 21.91 20.81
PEG (5 yr expected): 0.96 1.28 1.02 2.11 1.08
P/S: 2.55 1.91 5.74 2.86 1.59
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Broadcom is trading above the industry average P/S ratio, which could explain some of the insider selling.

My analysis

There have been 12 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 26.79 and a forward P/E ratio of 11.52. The company has a book value of $13.20 per share and the stock has a 1.17% 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 high P/S ratio, high P/E ratio and the intensive insider selling activity.

4. BioMarin Pharmaceutical (NASDAQ:BMRN) develops and commercializes biopharmaceuticals for serious diseases and medical conditions in the United States, Europe, Latin America, and rest of the world.

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Insider selling by insider (last 30 days)

  • Jean Bienaime sold 44,000 shares on December 24, 2012 - January 22, 2013 pursuant to a Rule 10b5-1 trading plan executed on December 4, 2012. Jean Bienaime currently holds 153,691 shares or 0.1% of the company. Jean Bienaime joined BioMarin in May 2005 as Chief Executive Officer and member of the Board of Directors.
  • Jeffrey Ajer sold 3,000 shares on January 22 pursuant to a Rule 10b5-1 trading plan executed on December 11, 2012. Jeffrey Ajer currently holds 10,570 shares or less than 0.1% of the company. Jeffrey Ajer joined BioMarin in 2005 and is currently the Senior Vice President and Chief Commercial Officer.
  • Mark Wood sold 46,749 shares on January 22 pursuant to a Rule 10b5-1 trading plan executed on August 13, 2012. Mark Wood currently holds 25,646 shares or less than 0.1% of the company. Mark Wood joined BioMarin in May 2004 and currently serves as the Senior Vice President of Human Resources and Corporate Affairs.
  • Robert Baffi sold 39,575 shares on January 3-22 pursuant to a Rule 10b5-1 trading plan executed on August 6, 2012. Robert Baffi currently holds 100,413 shares or less than 0.1% of the company. Robert Baffi joined BioMarin in May 2000 and currently serves as Executive Vice President of Technical Operations.
  • Richard Meier sold 10,000 shares on January 2 pursuant to a Rule 10b5-1 trading plan executed on December 11, 2012. Richard Meier currently holds 18,650 shares or less than 0.1% of the company. Richard Meier joined BioMarin's Board in December 2006 and serves as the Chairman of the Audit Committee.

Insider selling by calendar month

Here is a table of BioMarin's insider trading activity by calendar month.

Month Insider selling / shares Insider buying / shares
January 2013 121,324 0
December 2012 62,415 0
November 2012 409,971 0
October 2012 39,665 0
September 2012 16,665 0
August 2012 47,665 0
July 2012 5,166 0
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January 2013 has been the second highest insider selling month during the past seven months.

Financials

The company reported the third-quarter financial results on October 25 with the following highlights:

Revenue $128.1 million
GAAP Net Loss $5.4 million
Cash $533.2 million
Debt $348.3 million
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Outlook

2012 Guidance

Revenue $475 million to $510 million
Net Cash Usage $20 million to $30 million
Cash Balance (End Of Year) $495 million to $505 million
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Anticipated Upcoming Milestones

  • 1Q 2013: Market authorization application filing for GALNS for MPS IVA
  • 1Q 2013: Results for Phase 1/2 trial for BMN-701 for Pompe disease
  • 1H 2013: IND filing for BMN-190 for LINCL (Batten disease)
  • 2Q 2013: Initiation of Phase 3 trial for PEG-PAL for PKU
  • 2Q 2013: Results for PKU-016 Kuvan neurocognitive study
  • Mid 2013: Initiation of Phase 2 trial for BMN-111 for achondroplasia
  • 2H 2013: Potential initiation of Phase 3 trial for BMN-673 for solid tumors
  • 4Q 2013: Potential FDA approval of GALNS for MPS IVA

Pipeline

The company has a product pipeline, with multiple clinical and preclinical IND (Investigational New Drug) candidates in development.

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My analysis

The stock has met its $54 price target from the Point and Figure chart and is currently trading at $55. There have been nine insider sell transactions and there have not been any insider buy transactions during the last 30 days. There are 10 analyst buy ratings, four neutral ratings and 0 sell ratings, with a average target price of $52.93. 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.

5. Cardinal Health (NYSE:CAH), a healthcare services company, provides pharmaceutical and medical products and services in the United States and internationally.

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Insider selling by insider (last 30 days)

  • Craig Morford sold 47,274 shares on January 23 pursuant to a Rule 10b5-1 plan adopted on August 24, 2012. Craig Morford currently holds 70,088 shares or less than 0.1% of the company. Craig Morford is Chief Legal and Compliance Officer of the company.
  • Michael Kaufmann sold 58,362 shares on January 23 pursuant to a Rule 10b5-1 plan adopted on August 24, 2012. Michael Kaufmann currently holds 104,330 shares or less than 0.1% of the company. Michael Kaufmann is the chief executive officer of the Pharmaceutical segment of Cardinal Health.
  • Stephen Falk sold 78,947 shares on January 10-23 pursuant to a Rule 10b5-1 plan adopted on August 29, 2012. Stephen Falk currently holds 53,830 shares or less than 0.1% of the company. Stephen Falk is executive vice president, general counsel and corporate secretary where he oversees the Legal function and acts as the secretary to the board of directors.
  • Mark Blake sold 1,471 shares on January 10 pursuant to a Rule 10b5-1 plan adopted on August 25, 2012. Mark Blake currently holds 17,955 shares or less than 0.1% of the company. Mark Blake is executive vice president of Strategy and Corporate Development.

Insider selling by calendar month

Here is a table of Cardinal Health's insider trading activity by calendar month.

Month Insider selling / shares Insider buying / shares
January 2013 186,054 0
December 2012 2,330 0
November 2012 2,564 0
October 2012 46,226 0
September 2012 79,410 0
August 2012 0 0
July 2012 0 0
June 2012 0 0
May 2012 8,135 0
April 2012 0 0
March 2012 0 0
February 2012 71,546 0
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January 2013 has been the highest insider selling month during the past 12 months.

Financials

The company reported the fiscal 2013 first-quarter financial results on October 30 with the following highlights:

Revenue $25.9 billion
Net income $271 million
Cash $2.4 billion
Debt $2.9 billion
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Competition

Cardinal Health's competitors include AmerisourceBergen (NYSE:ABC), McKesson (NYSE:MCK) and Owens & Minor (NYSE:OMI). Here is a table comparing these companies.

Company CAH ABC MCK OMI Industry
Market Cap: 15.20B 10.59B 25.16B 1.95B 15.31B
Employees: 32,500 13,400 37,700 4,800 13.40K
Qtrly Rev Growth (yoy): -0.03 N/A -0.01 0.00 0.07
Revenue: 106.65B 79.49B 123.19B 8.78B 106.65B
Gross Margin: 0.04 0.03 0.05 0.10 0.24
EBITDA: 2.23B 1.43B 2.96B 251.37M 2.23B
Operating Margin: 0.02 0.02 0.02 0.02 0.02
Net Income: 1.10B 708.19M 1.60B 107.24M N/A
EPS: 3.16 2.80 6.54 1.71 1.47
P/E: 14.14 16.05 16.31 17.98 16.48
PEG (5 yr expected): 1.43 1.23 1.18 2.01 1.24
P/S: 0.14 0.14 0.20 0.22 0.20
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Cardinal Health is growing below the industry average growth rate.

My analysis

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 14.14 and a forward P/E ratio of 11.93. The company has a book value of $18.31 per share and the stock has a 2.46% 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 negative revenue growth and the intensive insider selling activity.

Disclosure: I have no positions in any stocks mentioned, but may initiate a short position in BMRN over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.