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There was intensive insider selling in Neutral Tandem (NASDAQ:IQNT) in August, 2012, when the stock was trading above $8. The stock plunged all the way to $2.10 in November, 2012.

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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. Sanmina Corporation (NASDAQ:SANM) provides integrated electronics manufacturing services worldwide.

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Insider selling by insider (last 30 days)

  • Alan Reid sold 7,778 shares on April 24 and currently holds 28,000 shares or less than 0.1% of the company. Alan Reid is Executive Vice President, Global Human Resources.
  • Michael Tyler sold 27,778 shares on April 24 and currently holds 59,300 shares or less than 0.1% of the company. Michael Tyler is Executive Vice President, General Counsel and Corporate Secretary.
  • John Goldsberry sold 15,503 shares on April 24 and currently holds 52,117 shares or less than 0.1% of the company. John Goldsberry serves as a director of the company.

Insider selling by calendar month

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

MonthInsider selling / sharesInsider buying / shares
April 201351,0590
March 201300
February 201300
January 201300

The month of April has seen the all of the insider selling this year.

Financials

The company reported the fiscal 2013 second-quarter financial results on April 22 with the following highlights:

Revenue$1.4 billion
Net income$21.2 million
Cash$411.9 million
Debt$744.3 million

Outlook

The company's outlook for the third fiscal quarter ending June 29, 2013, is as follows:

  • Revenue between $1.45 billion to $1.50 billion.
  • Non-GAAP diluted earnings per share between $0.32 to $0.38.

Competition

Sanmina's competitors include Flextronics International (NASDAQ:FLEX) and Jabil Circuit (NYSE:JBL). Here is a table comparing these companies.

CompanySANMFLEXJBLIndustry Average (Diversified Electronics)
Market Cap:1.02B4.51B3.51B119.76M
Employees:36,146159,000141,000800.00
Qtrly Rev Growth (yoy):-0.02-0.180.040.08
Revenue:6.05B24.69B17.64B194.77M
Gross Margin:0.070.060.070.25
EBITDA:253.11M1.13B1.01B6.88M
Operating Margin:0.030.020.040.02
Net Income:194.91M462.69M378.50MN/A
EPS:2.320.631.810.01
P/E:5.3410.879.5714.64
PEG (5 yr expected):0.771.280.640.86
P/S:0.170.180.200.55

Sanmina is trading below the industry average P/S ratio.

My analysis

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 5.34 and a forward P/E ratio of 7.56. The company has a book value of $12.29 per share. 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.

2. Dr Pepper Snapple Group (NYSE:DPS) operates as a brand owner, manufacturer, and distributor of non-alcoholic beverages in the United States, Canada, Mexico, and the Caribbean.

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Insider selling by insider (last 30 days)

  • David Thomas sold 17,167 shares on April 25 and currently holds 29,177 shares or less than 0.1% of the company. David Thomas joined Dr Pepper Snapple Group as senior vice president, research & development in 2006.
  • Angela Stephens sold 2,595 shares on April 25 and currently holds 10,933 shares or less than 0.1% of the company. Angela Stephens is Senior Vice President, Controller.
  • Martin Ellen sold 25,353 shares on April 2-25 and currently holds 111,408 options or less than 0.1% of the company. Martin Ellen is chief financial officer for Dr Pepper Snapple Group.

Insider selling by calendar month

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

Month

Insider selling / shares

Insider buying / shares

April 2013

45,115

0

March 2013

54,420

0

February 2013

0

0

January 2013

0

0

There have been 99,535 shares sold and zero shares purchased this year.

Financials

The company reported the first-quarter financial results on April 24 with the following highlights:

Revenue

$1.4 billion

Net income

$106 million

Cash

$208 million

Debt

$2.8 billion

Outlook

The company expects full year reported net sales growth of approximately 3% and diluted earnings per share to be in the $3.04 to $3.12 range, excluding the impact of commodity mark-to-market gains and losses.

Competition

Dr Pepper 's competitors include The Coca-Cola Company (NYSE:KO), Monster Beverage (NASDAQ:MNST) and Pepsico (NYSE:PEP). Here is a table comparing these companies.

Company

DPS

KO

MNST

PEP

Industry Average (Beverages - Soft Drinks)

Market Cap:

9.82B

187.57B

9.39B

128.04B

2.67B

Employees:

19,000

150,900

1,214

278,000

3.72K

Qtrly Rev Growth (yoy):

0.01

-0.01

0.15

0.01

0.14

Revenue:

6.01B

47.92B

2.06B

65.64B

1.61B

Gross Margin:

0.58

0.60

0.52

0.52

0.43

EBITDA:

1.31B

13.15B

567.09M

12.00B

151.30M

Operating Margin:

0.18

0.23

0.27

0.14

0.09

Net Income:

633.00M

8.72B

340.02M

6.12B

N/A

EPS:

3.00

1.91

1.86

3.90

0.60

P/E:

16.04

22.04

30.51

21.21

22.64

PEG (5 yr expected):

2.02

2.20

1.32

2.09

1.84

P/S:

1.63

3.91

4.55

1.94

1.74

Dr Pepper's P/S ratio is in line with the industry average.

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 16.04 and a forward P/E ratio of 14.44. The company has a book value of $10.97 per share and the stock has a dividend yield of 3.16%. 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.

3. Sonoco Products Company (NYSE:SON) engages in the manufacture and sale of industrial and consumer packaging products in the United States, Europe, Canada, and other regions.

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Insider selling by insider (last 30 days)

  • Kevin Mahoney sold 612 shares on April 29 and currently holds 4,788 shares or less than 0.1% of the company. Kevin Mahoney is Senior Vice President Corporate planning.
  • Vicki Arthur sold 1,450 shares on April 22 and currently holds 22,217 shares or less than 0.1% of the company. Vicki Arthur has been Vice President, Protective Solutions since January 2013.
  • Harris Deloach sold 73,000 shares on April 24-29 and currently holds 43,171 shares or less than 0.1% of the company. Harris Deloach has been Chairman of the Board since 2005.
  • Marty Pignone sold 10,000 shares on April 25 and currently holds 11,627 shares or less than 0.1% of the company. Marty Pignone has been Vice President, Primary Materials Group, NA since January 2013.
  • Howard Coker sold 3,036 shares on April 19 and currently holds 140,406 shares or 0.1% of the company. Howard Coker has been Group Vice President, Global Rigid Paper and Plastics since January 2013.

Insider selling by calendar month

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

Month

Insider selling / shares

Insider buying / shares

April 2013

88,098

0

March 2013

0

0

February 2013

94,700

0

January 2013

0

0

There have been 182,798 shares sold and zero shares purchased this year.

Financials

The company reported the first-quarter financial results on April 18 with the following highlights:

Revenue$1.2 billion
Net income$48.1 million
Cash$163.5 million
Debt$1.1 billion

Outlook

  • Second quarter 2013 base earnings are expected to be $0.56 to $0.60 per diluted share.
  • Guidance for full-year 2013 base earnings is to $2.26 to $2.32 per diluted share.

Competition

Sonoco's competitors include Bemis Company (NYSE:BMS) and Rock-Tenn Company (NYSE:RKT). Here is a table comparing these companies.

CompanySONBMSRKTIndustry Average (Packaging & Containers)
Market Cap:3.57B4.03B7.26B341.38M
Employees:19,90019,56426,3001.66K
Qtrly Rev Growth (yoy):-0.03-0.040.020.08
Revenue:4.75B5.09B9.27B1.11B
Gross Margin:0.180.190.170.22
EBITDA:563.48M622.70M1.18B111.97M
Operating Margin:0.080.080.070.07
Net Income:201.08M177.30M550.90MN/A
EPS:1.961.717.590.44
P/E:17.7222.9013.1112.66
PEG (5 yr expected):2.582.010.901.26
P/S:0.750.790.780.48

Sonoco's valuation is in line with its direct competitors.

My analysis

There have been six 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 17.72 and a forward P/E ratio of 13.94. The company has a book value of $15.08 per share and the stock has a dividend yield of 3.57%. 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.

Source: 2 Consumer Goods Companies And 1 Tech Stock With Recent Intensive Insider Selling