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There was intensive insider selling in Boingo Wireless (NASDAQ:WIFI) in March 2012 and also in February 2012. The stock peaked at $13.25 on March 29, 2012 and is currently trading 51.7% below the March, 2012 highs.

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With this episode in mind, I screened 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%.

In this article, I will feature three 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)

  • Mark Laret sold 2,102 shares on February 22 and currently holds 0 shares of the company. Mark Laret was elected a director in February of 2007.
  • Venkatraman Thyagarajan sold 5,000 shares on February 19 and currently holds 3,594 shares or less than 0.1% of the company. Venkatraman Thyagarajan joined the Varian Medical Systems Board of Directors in late 2008.
  • Ruediger Naumann-Etienne sold 7,102 shares on January 28 - February 19 and currently holds 0 shares of the company. Ruediger Naumann-Etienne has been a director of the company since 2003.
  • John Kuo sold 1,111 shares on February 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 1,593 shares on February 11-14 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.
  • Elisha Finney sold 5,000 shares on February 1 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.
  • Clarence Verhoef sold 748 shares on January 29 and currently holds 705 shares or less than 0.1% of the company. Clarence Verhoef is Senior Vice President, Finance and Controller.

Insider selling by calendar month

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

MonthInsider selling / sharesInsider buying / shares
February 201316,9080
January 2013116,4340
December 2012187,9350
November 201287,4750
October 2012191,4770
September 20125,9000
August 201247,5850
July 20124,0000
June 20124,0000

There have been 661,714 shares sold and 0 purchased since June 2012.

Financials

The company reported the first-quarter fiscal 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

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.

CompanyVARARAYIndustry Average (Medical Appliances & Equipment)
Market Cap:7.55B327.49M1.61B
Employees:6,1001,1001.84K
Qtrly Rev Growth (yoy):0.09-0.270.15
Revenue:2.86B362.88M560.04M
Gross Margin:0.430.340.65
EBITDA:673.70M-44.46M96.51M
Operating Margin:0.21-0.210.14
Net Income:432.10M-82.93MN/A
EPS:3.83-1.230.71
P/E:18.06N/A21.74
PEG (5 yr expected):1.470.021.48
P/S:2.640.902.69

Varian Medical Systems' P/S ratio is in line with the industry average.

My analysis

The stock has a $62 price target from the Point and Figure chart. There have been nine 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 18.06 and a forward P/E ratio of 14.98. The company has a book value of $14.42 per share. I believe there is an opportunity for a short entry with the $62 price target from the Point and Figure chart. I would place a stop loss at $76, which is the all time high. The two main reasons for the proposed short entry are bearish Point and Figure chart and the intensive insider selling activity.

2. Kosmos Energy (NYSE:KOS) engages in the exploration and production of oil and gas in Africa and South America.

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Insider selling by insider (last 30 days)

  • Brian Maxted sold 1,061,461 shares on February 21 pursuant to a secondary offering. Brian Maxted currently holds 6,096,136 shares or 1.6% of the company. Brian Maxted is Chief Executive Officer, Chief Exploration Officer, Director and Founding Partner.
  • William Hayes sold 80,000 shares on February 21 pursuant to a secondary offering and 15,000 shares on February 1 pursuant to a Rule 10b5-1 trading plan. William Hayes currently holds 1,549,702 shares or 0.4% of the company. William Hayes is Senior Vice President, Legal and External Affairs.
  • Greg Dunlevy sold 720,585 shares on February 21 pursuant to a secondary offering. Greg Dunlevy currently controls 8,476,799 shares or 2.2% of the company. Greg Dunlevy is Executive Vice President, Chief Financial Officer, Founding Partner.
  • Marvin Garrett sold 103,726 shares on February 21 pursuant to a secondary offering. Marvin Garrett currently controls 1,426,679 shares or 0.4% of the company. Marvin Garrett is Senior Vice President, Operations and Development.
  • Eric Haas sold 41,620 shares on February 21 pursuant to a secondary offering. Eric Haas currently controls 353,731 shares or less than 0.1% of the company. Eric Haas is Senior Vice President, Technical Services and Production.
  • Paul Dailly sold 579,408 shares on February 21 pursuant to a secondary offering. Paul Dailly currently holds 5,647,773 shares or 1.4% of the company. Paul Dailly is Senior Vice President & Chief Geoscientist, Founding Partner.
  • David Krieger sold 15,077,261 shares on February 21 by Warburg Pincus pursuant to a secondary offering. Warburg Pincus currently controls 139,301,876 shares or 35.8% of Kosmos Energy. David Krieger serves as a director of Kosmos Energy.
  • Blackstone Holdings sold 12,335,939 shares on February 21 pursuant to a secondary offering. Blackstone Holdings currently controls 113,974,241 shares or 29.3% of Kosmos Energy.

Insider selling by calendar month

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

MonthInsider selling / sharesInsider buying / shares
February 201330,015,0000
January 2013130,0000
December 201245,0000
November 20123,1000
October 201200
September 201200
August 2012010,000
July 201200
June 201200
May 201200
April 201200
March 201200
February 201200

The month of February 2013 has seen the most insider selling since the initial public offering in May 2011.

Financials

The company reported the full year 2012 financial results on February 25 with the following highlights:

Revenue$672.2 million
Net loss$67.0 million
Cash$515.2 million
Debt$1.0 billion

Competition

Kosmos Energy's competitors include Exxon Mobil Corporation (NYSE:XOM) and Hess Corporation (NYSE:HES). Here is a table comparing these companies.

CompanyKOSXOMHESIndustry Average (Independent Oil & Gas)
Market Cap:4.10B400.22B22.13B827.94M
Employees:190N/AN/A229.00
Qtrly Rev Growth (yoy):-0.030.00-0.020.20
Revenue:671.33M449.89B37.69B299.73M
Gross Margin:0.860.270.240.66
EBITDA:269.65M94.43B7.36B138.09M
Operating Margin:0.130.170.110.12
Net Income:-65.87M44.88B2.22BN/A
EPS:-0.189.706.520.01
P/E:N/A9.169.9717.99
PEG (5 yr expected):N/A6.321.431.17
P/S:5.940.880.584.50

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

My analysis

There have been nine insider sell transactions and there have not been any insider buy transactions during the last 30 days. The stock is trading at a forward P/E ratio of 33.06. The company has a book value of $2.49 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.

3. Gentiva Health Services (NASDAQ:GTIV) provides home health services and hospice services in the United States.

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Insider selling by insider (last 30 days)

  • Jeff Shaner sold 28,200 shares on February 22-25 and currently holds 91,873 shares or 0.3% of the company. Jeff Shaner is Senior Vice President, President of the Hospice Division.
  • John Camperlengo sold 21,000 shares on February 15-22 and currently holds 102,161 shares or 0.3% of the company. John Camperlengo is Senior Vice President, General Counsel, Chief Compliance Officer and Secretary.
  • Rodney Windley sold 10,000 shares on February 15 and currently controls 500,958 shares or 1.6% of the company. Rodney Windley was named executive Chairman of the Board in February 2013.

Insider selling by calendar month

Here is a table of Gentiva Health Services' insider trading activity by calendar month.

MonthInsider selling / sharesInsider buying / shares
February 201359,2000
January 201360,0000
December 201200
November 2012335,2830
October 201200
September 201200
August 201217,3430
July 201200
June 201200
May 201200
April 201200
March 201200
February 201200

There have been 471,826 shares sold and there have been zero shares purchased since February 2012.

Financials

The company reported the full year 2012 financial results on February 7 with the following highlights:

Revenue$1.7 billion
Net income$26.8 million
Cash$207.1 million
Debt$935.2 million

Competition

Gentiva Health Services' competitors include Amedisys (NASDAQ:AMED). Here is a table comparing these two companies.

CompanyGTIVAMEDIndustry Average (Home Health Care)
Market Cap:318.02M340.04M191.29M
Employees:N/A16,5003.80K
Qtrly Rev Growth (yoy):-0.050.010.29
Revenue:1.71B1.50B465.72M
Gross Margin:0.470.440.44
EBITDA:174.88M104.66M64.14M
Operating Margin:0.090.040.04
Net Income:26.80M31.33MN/A
EPS:0.870.920.87
P/E:11.8911.9213.51
PEG (5 yr expected):1.170.711.07
P/S:0.190.230.32

Gentiva Health Services is growing slower than the industry, 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. The stock is trading at a P/E ratio of 11.89 and a forward P/E ratio of 7.60. The company has a book value of $7.63 per share. There are two analyst buy ratings, six neutral ratings and one sell rating, with an average target price of $8.88. 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 negative revenue growth, bearish analyst target prices and the intensive insider selling activity.

Source: 3 Stocks With Recent Intensive Insider Selling