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There was intensive insider selling in Nuance Communications (NASDAQ:NUAN) in February 2012, when the stock peaked at $31.15. The stock is currently trading at $19.01 or 39.0% below the all time high made in February 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. LinkedIn Corporation (NYSE:LNKD) operates an online professional network.

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Insider selling by insider (last 30 days)

  • Steven Sordello sold 20,000 shares on May 8 pursuant to a Rule 10b5-1 trading plan. Steven Sordello currently holds 48,388 shares or less than 0.1% of the company. Steven Sordello is Senior Vice President and Chief Financial Officer.
  • Kevin Scott sold 6,250 shares on May 8 pursuant to a Rule 10b5-1 trading plan. Kevin Scott currently holds 47,119 shares or less than 0.1% of the company. Kevin Scott is Senior Vice President, Engineering.
  • Erika Rottenberg sold 8,000 shares on April 24 - May 9 pursuant to a Rule 10b5-1 trading plan. Erika Rottenberg currently holds 26,633 shares or less than 0.1% of the company. Erika Rottenberg is Vice President, General Counsel and Secretary.
  • Jeff Weiner sold 74,000 shares on April 16 - May 7 pursuant to a Rule 10b5-1 trading plan. Jeff Weiner currently holds 195,530 shares or 0.2% of the company. Jeff Weiner is the CEO of LinkedIn.
  • Reid Hoffman sold 166,668 shares on April 16 - May 7 pursuant to a Rule 10b5-1 trading plan. Reid Hoffman currently holds 16,906,569 shares or 15.3% of the company. Reid Hoffman is Executive Chairman and a co-founder of LinkedIn.
  • Leslie Kilgore sold 10,000 shares on May 7 pursuant to a Rule 10b5-1 trading plan. Leslie Kilgore currently holds 52,292 shares or less than 0.1% of the company. Leslie Kilgore has served on LinkedIn's board of directors since March 2010.
  • George Battle sold 10,000 shares on May 7 pursuant to a Rule 10b5-1 trading plan. George Battle currently holds 77,292 shares or less than 0.1% of the company. George Battle became a member of LinkedIn's board of directors in February 2010.
  • David Sze sold 31,874 shares on April 15 - May 6 pursuant to a Rule 10b5-1 trading plan. David Sze currently holds 329,872 shares or 0.3% of the company. David Sze became a board member of LinkedIn in September 2004.
  • David Henke sold 17,708 shares on May 6 pursuant to a Rule 10b5-1 trading plan. David Henke currently holds 35,758 shares or less than 0.1% of the company. David Henke is Senior Vice President, Operations.
  • Deep Nishar sold 11,458 shares on May 6 pursuant to a Rule 10b5-1 trading plan. Deep Nishar currently holds 64,638 shares or less than 0.1% of the company. Deep Nishar is Senior Vice President, Products and User Experience.
  • Michael Gamson sold 8,747 shares on April 15 pursuant to a Rule 10b5-1 trading plan. Michael Gamson currently holds 132,578 shares or 0.1% of the company. Michael Gamson is Senior Vice President, Global Solutions.

Insider selling by calendar month

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

MonthInsider selling / sharesInsider buying / shares
May 2013215,6870
April 2013347,7060
March 2013398,0770
February 2013474,0200
January 2013427,6250

There have been 1,863,115 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$324.7 million
Net income$22.6 million
Cash$830.3 million

Outlook

  • Q2 2013 Guidance: Revenue is expected to range between $342 million and $347 million. Adjusted EBITDA is expected to range between $77 million and $79 million.
  • Full Year 2013 Guidance: Revenue was revised upward by $20 million to range between $1.430 billion and $1.460 billion. Adjusted EBITDA was revised upward by $15 million to range between $330 million and $345 million.

Competition

LinkedIn's competitors include Facebook (NASDAQ:FB) and Monster Worldwide (NYSE:MWW). Here is a table comparing these companies.

CompanyLNKDFBMWWIndustry Average (Internet Information Providers)
Market Cap:19.18B64.51B617.65M2.07B
Employees:3,7794,9005,00020.88K
Qtrly Rev Growth (yoy):0.720.38-0.091.71
Revenue:1.11B5.49B868.63M420.42M
Gross Margin:0.870.730.550.72
EBITDA:149.47M1.31B135.55M32.31M
Operating Margin:0.060.100.080.19
Net Income:39.24M112.00M55.93MN/A
EPS:0.260.05-2.310.37
P/E:673.57580.00N/A21.79
PEG (5 yr expected):2.091.631.130.68
P/S:17.3011.750.714.81

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

My analysis

There have been 15 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 673.57 and a forward P/E ratio of 82.75. The company has a book value of $7.96 per share. The stock has a $160 price target from the Point and Figure chart. I believe there is an opportunity for a short entry with the $160 target price. I would place a stop loss at $203, which is the all time high. The four main reasons for the proposed short entry are high P/S ratio, high P/E ratio, bearish Point and Figure chart and the intensive insider selling activity.

2. Netflix (NASDAQ:NFLX) provides Internet television network service that enables subscribers to stream TV shows and movies directly on TVs, computers, and mobile devices in the United States and internationally.

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Insider selling by insider (last 30 days)

  • Jonathan Friedland sold 2,281 shares on May 6-9 pursuant to duly adopted trading plan under Rule 10b5-1(c). Jonathan Friedland currently holds zero shares of the company. Jonathan Friedland is Chief Communications Officer.
  • Theodore Sarandos sold 83,041 shares on May 6 pursuant to duly adopted trading plan under Rule 10b5-1(c). Theodore Sarandos currently holds zero shares of the company. Theodore Sarandos is Chief Content Officer.
  • David Hyman sold 20,334 shares on May 6 pursuant to duly adopted trading plan under Rule 10b5-1(c). David Hyman currently holds 5,230 shares or less than 0.1% of the company. David Hyman has served as Netflix General Counsel since 2002.
  • Jay Hoag sold 451,786 shares on April 25 - May 1 and currently controls 76,250 shares or 0.1% of the company. Jay Hoag has served as one of the company's directors since June 1999.
  • David Wells sold 10,912 shares on April 30 pursuant to duly adopted trading plan under Rule 10b5-1(c). David Wells currently holds 646 options or less than 0.1% of the company. David Wells has served as the company's Chief Financial Officer since December 2010.
  • William Holmes sold 750 shares on May 1 pursuant to duly adopted trading plan under Rule 10b5-1(c). William Holmes currently holds 461 options or less than 0.1% of the company. William Holmes is Chief Business Development Officer.
  • Leslie Kilgore sold 24,212 shares on April 23 - May 1 pursuant to duly adopted trading plan under Rule 10b5-1(c). Leslie Kilgore currently holds 23,028 shares or less than 0.1% of the company. Leslie Kilgore serves as a director of the company.
  • George Battle sold 24,000 shares on April 29 pursuant to duly adopted trading plan under Rule 10b5-1(c). George Battle currently controls 13,500 shares or less than 0.1% of the company. George Battle has served as one of the company's directors since June 2005.
  • Tawni Cranz sold 5,643 shares on April 24 pursuant to duly adopted trading plan under Rule 10b5-1(c). Tawni Cranz currently holds zero shares of the company. Tawni Cranz became Chief Talent Officer in October 2012.

Insider selling by calendar month

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

MonthInsider selling / sharesInsider buying / shares
May 2013110,8950
April 2013512,8140
March 20137500
February 20131,6040
January 2013398,9710

There have been 1,025,034 shares sold and zero shares purchased this year.

Financials

The company reported the first-quarter financial results on April 22 with the following highlights:

Revenue$1.0 billion
Net income$2.7 million
Cash$1.0 billion
Debt$700.0 million

Outlook

The company expects Q2 net income of $14 million to $29 million.

Competition

The market for entertainment video is intensely competitive and subject to rapid change. Many consumers maintain simultaneous relationships with multiple entertainment video providers and can easily shift spending from one provider to another. Netflix's principal competitors vary by geographic region and include:

  • Multichannel video programming distributors [MVPDs] with free TV Everywhere applications such as HBO GO or Showtime Anytime in the U.S. and SkyGo or BBC iPlayer in the U.K., and other on demand content from cable providers, such as Time Warner and Comcast; direct broadcast satellite providers, such as DIRECTV and Echostar; and telecommunication providers such as AT&T and Verizon
  • "Over-the-top" Internet movie and TV content providers, such as, Amazon.com's Prime Video, Hulu.com and Hulu Plus, LOVEFiLM, Clarovideo, Viaplay, and Google's YouTube
  • Transactional content providers, such as Apple's iTunes, Amazon's Instant Video, GooglePlay, and Vudu
  • DVD rental outlets and kiosk services, such as Blockbuster and Redbox
  • Entertainment video retailers, such as Best Buy, Wal-Mart and Amazon.com

My analysis

There have been 13 insider sell transactions and there have not been any insider buy transactions during the last 30 days. There are 10 analyst buy ratings, 20 neutral ratings and six sell ratings, with an average target price of $201.42. The stock is trading at a P/E ratio of 518.31 and a forward P/E ratio of 68.46. The company has a book value of $14.47 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/E ratio, bearish analyst estimates and the intensive insider selling activity.

3. Acadia Healthcare Company (NASDAQ:ACHC) develops and operates inpatient psychiatric facilities, residential treatment centers, group homes, and substance abuse facilities in the United States.

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Insider selling by insider (last 30 days)

  • William Grieco sold 15,000 shares on May 8-10 and currently holds 48,818 shares or 0.1% of the company. William Grieco has served as a director of Acadia since April 2011.
  • David Duckworth sold 4,000 shares on May 9 and currently holds 22,242 shares or less than 0.1% of the company. David Duckworth is Chief Financial Officer of the company.
  • Ronald Fincher sold 19,593 shares on May 6-7 and currently controls 243,386 shares or 0.5% of the company. Ronald Fincher joined Acadia in February 2011 and has served as Acadia's Chief Operating Officer since that time.
  • Christopher Howard sold 17,578 shares on May 3 and currently holds 236,749 shares or 0.5% of the company. Christopher Howard joined Acadia in February 2011 and has served as the company's Executive Vice President, General Counsel and Secretary since that time.
  • Brent Turner sold 18,945 shares on May 6-7 and currently controls 285,528 shares or 0.6% of the company. Brent Turner joined Acadia in February 2011 and served as a Co-President of the company from that time until April 2012 when he was named President.
  • Randall Goldberg sold 1,708 shares on May 3 and currently holds 13,471 shares or less than 0.1% of the company. Randall Goldberg is an insider of the company.
  • Joey Jacobs sold 17,789 shares on May 3-6 and currently controls 1,061,034 shares or 2.2% of the company. Joey Jacobs joined Acadia in February 2011 and has served as the Chairman of the Acadia board of directors and as Acadia's Chief Executive Officer since that time.
  • Danny Carpenter sold 6,138 shares on May 3 and currently holds 77,882 shares or 0.2% of the company. Danny Carpenter is an insider of the company.
  • Bruce Shear sold 175,000 shares on May 3-7 and currently holds 123,950 shares or 0.2% of the company. Bruce Shear joined Acadian in February 2011 and has served as the company's Executive Vice Chairman and President since that time.
  • Karen Prince sold 50,000 shares on April 25 - May 1 and currently holds 138,326 shares or 0.3% of the company. Karen Prince is an insider of the company.
  • Norman Carter sold 50,000 shares on April 25 - May 1 and currently holds 190,896 shares or 0.4% of the company. Norman Carter is an insider of the company.

Insider selling by calendar month

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

MonthInsider selling / sharesInsider buying / shares
May 2013275,7510
April 2013100,0000
March 201300
February 201300
January 201300

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

Financials

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

Revenue$161.2 million
Net income$3.7 million
Cash$99.8 million
Debt$569.7 million

Outlook

On May 1 Acadia increased its guidance for 2013 adjusted earnings per diluted share to a range of $1.00 to $1.03 from the prior range of $0.96 to $1.00.

Competition

Acadia's competitors include Universal Health Services (NYSE:UHS). Here is a table comparing these two companies.

CompanyACHCUHS
Market Cap:1.70B6.61B
Employees:4,90046,000
Qtrly Rev Growth (yoy):0.800.02
Revenue:479.11M7.00B
Gross Margin:0.370.39
EBITDA:94.05M1.27B
Operating Margin:0.180.14
Net Income:21.23M434.23M
EPS:0.484.43
P/E:70.9915.22
PEG (5 yr expected):1.132.00
P/S:3.550.94

Acadia is trading at a higher P/S and P/E ratios than its direct competitor.

My analysis

There have been 14 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 70.99 and a forward P/E ratio of 25.35. The company has a book value of $8.74 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 relatively high P/E ratio, relatively high P/S ratio and the intensive insider selling activity.

Disclosure: I have no positions in any stocks mentioned, but may initiate a short position in LNKD 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.

Source: 2 Tech Stocks And 1 Healthcare Company With Recent Intensive Insider Selling