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There was intensive insider selling in Isis Pharmaceuticals (NASDAQ:ISIS) in late April, when the stock was trading above $22. The stock is currently trading at $19.02 or 17.4% below the all time high made in early May.

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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. Mettler-Toledo International (NYSE:MTD) supplies precision instruments and services worldwide.

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Insider selling by insider (last 30 days)

  • Robert Spoerry sold 15,000 shares on May 6-8 and currently holds 55,000 options or 0.2% of the company. Robert Spoerry is Chairman of the Board.
  • William Donnelly sold 8,000 shares on May 8 and currently holds 46,853 shares or 0.2% of the company. William Donnelly joined the company in 1997 and served as Chief Financial Officer since that time.
  • Oliver Filliol sold 15,000 shares on May 6-7 and currently holds 16,279 shares or less than 0.1% of the company. Oliver Filliol is the CEO of the company.

Insider selling by calendar month

Here is a table of Mettler-Toledo's insider trading activity by calendar month.

MonthInsider selling / sharesInsider buying / shares
May 201338,0000
April 201300
March 20136,4000
February 201350,1890
January 201300

There have been 94,589 shares sold and zero shares purchased this year.

Financials

The company reported the first-quarter financial results on May 2 with the following highlights:

Revenue$524.4 million
Net income$52.5 million
Cash$93.2 million
Debt$439.9 million

Outlook

  • The management anticipates that local currency sales growth in 2013 will be in the range of 1% to 3%, with growth stronger in the second half of the year. This sales growth will result in adjusted EPS in the range of $10.40 to $10.60, an increase of 8% to 10%.
  • The management anticipates that local currency sales growth for the second quarter of 2013 will be in the range of 0% to 2%, and adjusted EPS will be in the range of $2.30 to $2.35, an increase of 7% to 9%.

Competition

Mettler-Toledo's competitors include Siemens (SI) and Thermo Fisher Scientific (NYSE:TMO). Here is a table comparing these companies.

CompanyMTDSITMOIndustry Average (Medical Laboratories & Research)
Market Cap:6.87B89.99B30.31B29.59B
Employees:12,400366,00038,90038.90K
Qtrly Rev Growth (yoy):-0.02-0.070.041.57
Revenue:2.33B100.02B12.64B12.64B
Gross Margin:0.530.280.430.43
EBITDA:469.77M11.59B2.65B2.65B
Operating Margin:0.180.080.130.13
Net Income:291.06M6.38B1.32BN/A
EPS:9.246.553.393.39
P/E:24.5416.3024.9424.34
PEG (5 yr expected):1.500.241.511.45
P/S:2.900.892.372.34

Mettler-Toledo's P/S ratio is higher than the industry average, 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 24.54 and a forward P/E ratio of 18.76. The company has a book value of $27.20 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. MDU Resources Group (NYSE:MDU) operates as a diversified natural resource company in the United States.

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Insider selling by insider (last 30 days)

  • Thomas Everist sold 90,000 shares on May 7-9 and currently controls 1,795,590 shares or 1.0% of the company. Thomas Everist serves as a director of the company. On May 6 MDU Resources announced that Thomas Everist intends to file a Form 144 on May 7 with the Securities and Exchange Commission, indicating his intent to sell within the next three months up to 700,000 shares of MDU Resources stock held by The Everist Company.
  • Steven Bietz sold 10,000 shares on May 7 and currently controls 59,521 shares or less than 0.1% of the company. Steven Bietz is President and Chief Executive Officer of WBI Energy.
  • Dennis Johnson sold 1,800 shares on May 7 and currently holds 82,704 shares or less than 0.1% of the company. Dennis Johnson serves as a director of the company.
  • William Schneider sold 65,000 shares on May 7 and currently holds 38,755 shares or less than 0.1% of the company. William Schneider is Executive Vice President of Bakken Development of MDU Resources.

Insider selling by calendar month

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

MonthInsider selling / sharesInsider buying / shares
May 2013166,8000
April 201300
March 201300
February 201300
January 201300

The month of May has seen all of the insider buying this year.

Financials

The company reported the first-quarter financial results on April 30 with the following highlights:

Revenue$931.6 million
Net income$56.3 million
Book value$14.09 per share

Outlook

David L. Goodin, president and chief executive officer of MDU Resources, commented on April 30:

"Our solid first quarter results and substantially higher construction backlogs along with an increase in our natural gas price projection to a range of $3.75 to $4.25, has resulted in our decision to increase and narrow our 2013 earnings per share guidance range to $1.30 to $1.40."

Competition

MDU Resources' competitors include Black Hills Corporation (NYSE:BKH), Northwestern Corporation (NYSE:NWE) and Vulcan Materials Company (NYSE:VMC). Here is a table comparing these companies.

CompanyMDUBKHNWEVMC
Market Cap:4.99B2.18B1.59B7.10B
Employees:8,6291,9251,4307,028
Qtrly Rev Growth (yoy):0.090.040.010.00
Revenue:4.15B1.19B1.07B2.57B
Gross Margin:0.240.370.640.13
EBITDA:808.03M405.98M312.03M388.82M
Operating Margin:0.110.210.190.03
Net Income:5.69M96.40M104.26M-58.49M
EPS:0.102.152.80-0.43
P/E:259.2222.9714.98N/A
PEG (5 yr expected):1.943.463.30-151.69
P/S:1.201.791.472.77

MDU Resources is trading at a lower P/S ratio than 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 259.22 and a forward P/E ratio of 17.86. The company has a book value of $14.09 per share and the stock has a dividend yield of 2.61%. 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. The Ultimate Software Group (NASDAQ:ULTI) designs, develops, and markets cloud-based human capital management software-as-a-service solutions to businesses across various industries in the United States and Canada.

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Insider selling by insider (last 30 days)

  • James Fitzpatrick sold 3,299 shares on May 9 and currently holds 17,939 shares or less than 0.1% of the company. James Fitzpatrick serves as a director of the company.
  • LeRoy Putten sold 4,000 shares on May 2 and currently holds 79,044 shares or 0.3% of the company. LeRoy Putten serves as a director of the company.
  • Marc Scherr sold 25,000 shares on May 2 pursuant to a Rule 10(b)5-1 trading plan. Marc Scherr currently holds 260,344 shares or 0.9% of the company. Marc Scherr is Vice Chairman and Chief Operating Officer.
  • Mitchell Dauerman sold 17,200 shares on May 2 pursuant to a Rule 10(b)5-1 trading plan. Mitchell Dauerman currently holds 89,400 shares or 0.3% of the company. Mitchell Dauerman is Executive Vice President, Chief Financial Officer, and Treasurer.

Insider selling by calendar month

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

MonthInsider selling / sharesInsider buying / shares
May 201349,4990
April 201300
March 201300
February 201370,6980
January 201300

There have been 120,197 shares sold and zero shares purchased this year.

Financials

The company reported the first-quarter financial results on April 30 with the following highlights:

Revenue$97.9 million
Net income$4.5 million
Cash$81.3 million
Debt$9.3 million

Outlook

For the second quarter of 2013:

  • Recurring revenues of approximately $81.0 million.
  • Total revenues of approximately $97.0 million.
  • Operating margin, on a non-GAAP basis, of approximately 15%.

For the year 2013:

  • Recurring revenues to increase by approximately 25% over those of 2012.
  • Total revenues to increase by approximately 23% over those of 2012.
  • Operating margin, on a non-GAAP basis, of approximately 17%.

Competition

Ultimate Software's competitors include Automatic Data Processing (NASDAQ:ADP) and Oracle (NYSE:ORCL). Here is a table comparing these companies.

CompanyULTIADPORCLIndustry Average (Internet Software & Services)
Market Cap:3.08B33.80B160.26B7.53B
Employees:1,60057,000115,0007.10K
Qtrly Rev Growth (yoy):0.250.12-0.010.39
Revenue:351.90M10.68B37.15B1.31B
Gross Margin:0.570.470.800.69
EBITDA:48.39M1.91B17.29B621.38M
Operating Margin:0.100.150.390.45
Net Income:18.13M1.40B10.57BN/A
EPS:0.642.942.154.42
P/E:175.2723.8215.847,355.00
PEG (5 yr expected):2.862.681.180.97
P/S:8.533.164.275.76

Ultimate Software 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 seven analyst buy ratings, 14 neutral ratings and zero sell ratings, with an average target price of $106. The stock is trading at a P/E ratio of 175.27 and a forward P/E ratio of 62.22. The company has a book value of $4.68 per share. Before entering short this stock, I would like to get a bearish confirmation from the Point and Figure chart. The four main reasons for the proposed short entry are relatively high P/S ratio, high P/E ratio, bearish analyst target prices and the intensive insider selling activity.

Source: 1 Healthcare, 1 Basic Materials And 1 Tech Mid Cap With Recent Intensive Insider Selling