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There was intensive insider selling in Ariad Pharmaceuticals (ARIA) from late September 2012 to early October 2012, when the stock was trading above $24. The stock is currently trading at $16.32 or 35.7% below the all time high made in October 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. McGrath RentCorp (MGRC), a business to business rental company, engages in the rental and sale of relocatable modular buildings, electronic test equipment, and liquid and solid containment tanks and boxes in the United States and internationally.

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Insider selling by insider (last 30 days)

  • David Whitney sold 16,000 shares on May 8-10 and currently holds 5,890 shares or less than 0.1% of the company. David Whitney joined the company as its Corporate Controller in 2000 and was elected Vice President and Principal Accounting Officer in March 2006.
  • Kristina Van Trease sold 19,000 shares on May 8-10 and currently controls 16,880 shares or less than 0.1% of the company. Kristina Van Trease was appointed Vice President and Division Manager of Mobile Modular Portable Storage in June 2009.
  • Dennis Stradford sold 2,100 shares on May 8 and currently holds 7,000 shares or less than 0.1% of the company. Dennis Stradford was elected a director of the company in 2002.
  • Keith Pratt sold 18,000 shares on May 3-7 and currently holds 5,232 shares or less than 0.1% of the company. Keith Pratt is Senior Vice President, Chief Financial Officer.

Insider selling by calendar month

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

MonthInsider selling / sharesInsider buying / shares
May 201355,1000
April 201300
March 2013137,4940
February 201324,0000
January 201300

There have been 216,594 shares sold and zero shares purchased this year.

Financials

The company reported the first-quarter financial results on May 1 with the following highlights:

Revenue$88.7 million
Net income$9.2 million
Cash$0.5 million
Debt$281.3 million

Outlook

The company expects its 2013 full-year earnings per share to be in a range of $1.85 to $1.95 per diluted share.

Competition

McGrath RentCorp's competitors include Electro Rent Corporation (ELRC). Here is a table comparing these two companies.

CompanyMGRCELRCIndustry Average (Rental & Leasing Services)
Market Cap:779.13M407.68M199.27M
Employees:760393120.00
Qtrly Rev Growth (yoy):0.120.080.43
Revenue:373.86M256.55M142.39M
Gross Margin:0.450.400.97
EBITDA:89.65M38.42M100.83M
Operating Margin:0.220.140.35
Net Income:44.08M22.61MN/A
EPS:1.750.940.41
P/E:17.6818.0717.77
PEG (5 yr expected):1.371.241.19
P/S:2.071.591.20

McGrath RentCorp 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 zero analyst buy ratings, three neutral ratings and zero sell ratings, with an average target price of $27.00. The stock is trading at a P/E ratio of 17.68 and a forward P/E ratio of 14.80. The company has a book value of $14.80 per share and the stock has a dividend yield of 3.10%. 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.

2. The Walt Disney Company (DIS) operates as an entertainment company worldwide.

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Insider selling by insider (last 30 days)

  • Alan Braverman sold 269,938 shares on May 9 pursuant to a Rule 10b5-1 trading plan. Alan Braverman currently holds 250,939 shares or less than 0.1% of the company. Alan Braverman was named executive vice president and general counsel of The Walt Disney Company in January 2003.
  • Kevin Mayer sold 27,537 shares on May 6 pursuant to a Rule 10b5-1 trading plan. Kevin Mayer currently holds 29,105 shares or less than 0.1% of the company. Kevin Mayer was appointed executive vice president of Corporate Strategy and Business Development in June 2005.
  • Brent Woodford sold 18,000 shares on April 16 - May 7 pursuant to a Rule 10b5-1 trading plan. Brent Woodford currently holds 22,812 shares or less than 0.1% of the company. Brent Woodford was appointed Senior Vice President, Planning and Control for The Walt Disney Company in February 2005.

Insider selling by calendar month

Here is a table of The Walt Disney Company's insider trading activity by calendar month.

MonthInsider selling / sharesInsider buying / shares
May 2013300,4750
April 201319,0000
March 201378,0980
February 20136,0000
January 201300

The month of May has seen the most insider selling this year.

Financials

The company reported the fiscal 2013 second-quarter, which ended March 30, financial results on May 7 with the following highlights:

Revenue$10.6 billion
Net income$1.5 billion
Cash$4.0 billion
Debt$16.9 billion

Competition

The Walt Disney Company's competitors include News Corp. (NWS) and Time Warner (TWX). Here is a table comparing these companies.

CompanyDISNWSTWXIndustry Average (Entertainment - Diversified)
Market Cap:121.33B77.82B56.81B381.99M
Employees:166,00048,00034,0002.90K
Qtrly Rev Growth (yoy):0.100.14-0.010.00
Revenue:43.76B35.47B28.69B667.81M
Gross Margin:0.210.380.460.38
EBITDA:11.35B6.98B7.43B22.03M
Operating Margin:0.210.160.230.01
Net Income:5.97B5.92B3.14BN/A
EPS:3.302.503.25N/A
P/E:20.3613.3718.7318.54
PEG (5 yr expected):1.55N/A1.331.18
P/S:2.812.201.992.17

The Walt Disney Company is trading above the industry average P/S ratio, which could explain some of the insider selling.

My analysis

There have been seven 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 20.36 and a forward P/E ratio of 17.23. The company has a book value of $22.78 per share and the stock has a dividend yield of 1.12%. 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. TW Telecom (TWTC) engages in the provision of managed network services in the United States.

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Insider selling by insider (last 30 days)

  • Paul Jones sold 30,000 shares on May 8 pursuant to the terms of a Rule 10b5-1 plan. Paul Jones currently holds 10,000 options or less than 0.1% of the company. Paul Jones is Executive Vice President, General Counsel, and Regulatory Policy for TW Telecom.
  • Gregory Attorri sold 19,500 shares on May 8 pursuant to the terms of a Rule 10b5-1 plan. Gregory Attorri currently holds zero shares of the company. Gregory Attorri serves as a director of the company.
  • Larissa Herda sold 750,000 shares on April 12 - May 7 pursuant to the terms of a Rule 10b5-1 plan. Larissa Herda currently beneficially owns 1,494,769 shares or 1.0% of the company. Larissa Herda is Chairman, CEO and President of the company.
  • John Blount sold 439,623 shares on April 30 - May 7 pursuant to the terms of a Rule 10b5-1 plan. John Blount currently holds zero shares of the company. John Blount was appointed Chief Operating Officer in June 2005.
  • Mark Peters sold 100,000 shares on April 12-30 pursuant to the terms of a Rule 10b5-1 plan. Mark Peters currently holds zero shares of the company. Mark Peters is Executive Vice President and Chief Financial Officer.

Insider selling by calendar month

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

MonthInsider selling / sharesInsider buying / shares
May 2013619,6530
April 2013729,8470
March 201300
February 20131,422,0000
January 201331,7500

There have been 2,803,250 shares sold and zero shares purchased this year.

Financials

The company reported the first-quarter financial results on May 6 with the following highlights:

Revenue$381.2 million
Net income$13.1 million
Cash$913.3 million
Debt$1.8 billion

Competition

TW Telecom's competitors include AT&T (T) and CenturyLink (CTL). Here is a table comparing these companies.

CompanyTWTCTCTLIndustry Average (Telecom Services - Domestic)
Market Cap:4.36B201.00B23.54B25.06B
Employees:3,147243,34047,00030.43K
Qtrly Rev Growth (yoy):0.06-0.02-0.020.02
Revenue:1.49B126.97B18.28B7.53B
Gross Margin:0.580.570.610.36
EBITDA:513.76M28.82B7.59B2.79B
Operating Margin:0.150.100.160.20
Net Income:69.25M7.38B874.00MN/A
EPS:0.461.291.411.75
P/E:62.3528.8926.7018.46
PEG (5 yr expected):3.612.7814.11N/A
P/S:2.931.581.273.33

TW Telecom is trading above the industry average P/E ratio, which could explain some of the insider selling.

My analysis

There have been 13 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 62.35 and a forward P/E ratio of 37.25. The company has a book value of $7.34 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/E ratio and the intensive insider selling activity.

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