1 Biotech, 1 Financial And 1 Grocery Store With Recent Intensive Insider Selling

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Includes: BMRN, TMK, WFM
by: Markus Aarnio

There was intensive insider selling in Genco Shipping & Trading (NYSE:GNK) in May 2008 when the stock was trading above $75. The stock is currently trading at $1.35 or 98.3% below the all time high made in 2008.

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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. Torchmark Corporation (NYSE:TMK) provides various life and health insurance products, and annuities in the United States, Canada, and New Zealand.

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Insider selling by insider (last 30 days)

  • Mark McAndrew sold 156,000 shares on May 14 and currently holds 195,921 shares or 0.2% of the company. Mark McAndrew is Executive Chairman of the Board.
  • Spencer Stone sold 3,125 shares on May 7 and currently holds 27,099 shares or less than 0.1% of the company. Spencer Stone is Controller of the company.
  • Roger Smith sold 11,250 shares on May 6 and currently holds 34,532 shares or less than 0.1% of the company. Roger Smith is Chief Executive Officer of American Income Life, a subsidiary of Torchmark Corporation.
  • Ben Lutek sold 14,000 shares on May 7 and currently holds 12,800 shares or less than 0.1% of the company. Ben Lutek is Vice President and Chief Actuary.
  • David Carlson sold 2,063 shares on May 3 and currently holds 2,812 options or less than 0.1% of the company. David Carlson is an insider of the company.
  • Charles Adair sold 9,000 shares on May 2 and currently holds 11,396 shares or less than 0.1% of the company. Charles Adair serves as a director of the company.
  • Vern Herbel sold 22,500 shares on May 1 and currently holds 39,200 shares or less than 0.1% of the company. Vern Herbel is Executive Vice President and Chief Administrative Officer.
  • Alan Hintz sold 3,750 shares on April 30 and currently holds 15 shares or less than 0.1% of the company. Alan Hintz is an insider of the company.
  • Michael Henrie sold 1,219 shares on April 29 and currently holds zero shares of the company. Michael Henrie is an insider of the company.

Insider selling by calendar month

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

Month Insider selling / shares Insider buying / shares
May 2013 217,938 0
April 2013 5,769 0
March 2013 280,519 0
February 2013 135,375 0
January 2013 0 0
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There have been 639,601 shares sold and zero shares purchased this year.

Financials

The company reported the first-quarter financial results on April 23 with the following highlights:

Net income $119.6 million
Book value $45.88 per share
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Outlook

Torchmark projects that for the year ending December 31, 2013, net operating income per share will range from $5.50 to $5.75.

Competition

Torchmark's competitors include Prudential Financial (NYSE:PRU) and Unum Group (NYSE:UNM). Here is a table comparing these companies.

Company TMK PRU UNM Industry Average (Life Insurance)
Market Cap: 6.11B 31.60B 7.71B 77.26B
Employees: 2,570 48,498 9,100 64.00K
Qtrly Rev Growth (yoy): 0.06 0.10 0.01 0.14
Revenue: 3.66B 85.75B 10.53B 63.13B
Gross Margin: 0.29 0.13 0.28 0.18
EBITDA: 873.52M 2.10B 1.48B 2.61B
Operating Margin: 0.24 0.02 0.13 0.10
Net Income: 530.22M 684.00M 893.10M N/A
EPS: 5.52 1.44 3.23 1.39
P/E: 11.81 47.12 8.95 45.19
PEG (5 yr expected): 1.24 0.64 0.91 1.21
P/S: 1.66 0.36 0.73 1.27
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Torchmark 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 company has an insider ownership of 1.47%. The stock is trading at a P/E ratio of 11.81 and a forward P/E ratio of 10.45. The company has a book value of $45.88 per share and the stock has a dividend yield of 1.05%. 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. BioMarin Pharmaceutical (NASDAQ:BMRN) develops and commercializes biopharmaceuticals for serious diseases and medical conditions in the United States, Europe, Latin America, and rest of the world.

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Insider selling by insider (last 30 days)

  • Jean Bienaime sold 70,800 shares on April 30 - May 14 and currently holds 157,000 options or 0.1% of the company. Jean Bienaime joined BioMarin in May 2005 as Chief Executive Officer and member of the Board of Directors.
  • Jeffrey Ajer sold 7,856 shares on April 19 - May 13 pursuant to a Rule 10b5-1 trading plan. Jeffrey Ajer currently holds 7,270 shares or less than 0.1% of the company. Jeffrey Ajer joined BioMarin in 2005 and is currently the Senior Vice President and Chief Commercial Officer.
  • George Davis sold 28,444 shares on May 3-14 and currently holds 41,708 shares or less than 0.1% of the company. George Davis joined BioMarin in March 2004, and currently serves as Senior Vice President, General Counsel and Secretary.
  • Robert Baffi sold 40,000 shares on May 3-14 pursuant to a Rule 10b5-1 trading plan. Robert Baffi currently holds 50,262 shares or less than 0.1% of the company. Robert Baffi joined BioMarin in May 2000 and currently serves as Executive Vice President of Technical Operations.
  • Brian Mueller sold 21,778 shares on May 2-14 and currently holds 6,660 shares or less than 0.1% of the company. Brian Mueller is Vice President, Corporate Controller.
  • Daniel Spiegelman sold 28,000 shares on May 1 and currently holds 33,000 shares or less than 0.1% of the company. Daniel Spiegelman joined BioMarin in 2012 and is the current Executive Vice President and Chief Financial Officer.
  • Henry Fuchs sold 20,000 shares on April 30 and currently holds 44,589 shares or less than 0.1% of the company. Henry Fuchs joined BioMarin in 2009 and is the current Executive Vice President and Chief Medical Officer.
  • Mark Wood sold 3,102 shares on April 22 pursuant to a Rule 10b5-1 trading plan. Mark Wood currently holds 23,245 shares or less than 0.1% of the company. Mark Wood joined BioMarin in May 2004 and currently serves as the Senior Vice President of Human Resources and Corporate Affairs.

Insider selling by calendar month

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

Month Insider selling / shares Insider buying / shares
May 2013 188,878 0
April 2013 51,102 0
March 2013 229,029 0
February 2013 83,003 0
January 2013 121,324 0
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There have been 673,336 shares sold and zero shares purchased this year.

Financials

The company reported the first-quarter financial results on April 25 with the following highlights:

Revenue $127.9 million
GAAP Net Loss $39.8 million
Cash $525.7 million
Debt $109.8 million
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Outlook

2013 Guidance

Revenue $530 million to $555 million
GAAP Net Loss $195 million to $170 million
Cash Balance (End Of Year) Over $420 million
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Anticipated Upcoming Milestones

2Q 2013: Initiation of Phase 3 trial for PEG-PAL for PKU
2Q 2013: Presentation on Phase 1/2 BMN-673 solid tumor data at ASCO meeting
Mid 2013: Initiation of Phase 2 trial for BMN-111 for achondroplasia
Mid 2013: Initiation of Phase 1/2 trial for BMN-190 for Batten disease
4Q 2013: Initiation of Phase 3 trial for BMN-673
4Q 2013: Potential FDA approval of Vimizim for MPS IVA
4Q 2013: Initiation of Phase 2/3 switching trial for BMN-701 for Pompe disease
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Pipeline

The company has a product pipeline, with multiple clinical and preclinical IND (Investigational New Drug) candidates in development.

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My analysis

There have been 20 insider sell transactions and there have not been any insider buy transactions during the last 30 days. The company has an insider ownership of 0.31% and the company has a book value of $9.00 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 negative earnings and the intensive insider selling activity.

3. Whole Foods Market (NASDAQ:WFM) owns and operates a chain of natural and organic foods supermarkets.

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Insider selling by insider (last 30 days)

  • Jonathan Seiffer sold 25,000 shares on May 13 and currently holds 61,595 shares or less than 0.1% of the company. Jonathan Seiffer serves as a director of the company.
  • Glenda Flanagan sold 9,150 shares on May 9-13 and currently holds 111,576 shares or less than 0.1% of the company. Glenda Flanagan is Executive Vice President and Chief Financial Officer.
  • Gabrielle Greene sold 2,500 shares on May 10 and currently holds 13,859 shares or less than 0.1% of the company. Gabrielle Greene has served as a director of the company since 2003.
  • John Mackey sold 100,000 shares on May 9-10 and currently holds 614,258 shares or 0.3% of the company. John Mackey is Co-Chief Executive Officer of the company.
  • A.C. Gallo sold 3,210 shares on May 9 and currently holds 30,146 shares or less than 0.1% of the company. A.C. Gallo is President & Chief Operating Officer.
  • Juan Nunez sold 2,625 shares on May 9 and currently holds 2,024 shares or less than 0.1% of the company. Juan Nunez is President, Florida Region.
  • Michael Bashaw sold 2,625 shares on May 9 and currently holds 336 shares or less than 0.1% of the company. Michael Bashaw is President, Midwest Region.
  • Ralph Sorenson sold 2,250 shares on May 9 and currently holds 28,900 shares or less than 0.1% of the company. Ralph Sorenson has served as a director of the company since 1994.
  • Shahid Hassan sold 2,500 shares on May 9 and currently holds 18,672 shares or less than 0.1% of the company. Shahid Hassan has served as a director of the company since 2005.
  • Walter Robb sold 10,000 shares on May 10 and currently holds 71,325 shares or less than 0.1% of the company. Walter Robb is Co-Chief Executive Officer of the company.
  • John Elstrott sold 2,500 shares on May 2-8 pursuant to a Rule 10b5-1 trading plan. John Elstrott currently holds 40,470 shares or less than 0.1% of the company. John Elstrott is Chairman of the Board.

Insider selling by calendar month

Here is a table of Whole Foods Market's insider trading activity by calendar month.

Month Insider selling / shares Insider buying / shares
May 2013 162,360 0
April 2013 0 0
March 2013 100,000 2,939
February 2013 16,471 0
January 2013 0 0
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The month of May has seen the most insider selling this year.

Financials

The company reported the fiscal 2013 second-quarter, which ended April 14, financial results on May 7 with the following highlights:

Revenue $3.0 billion
Net income 142 million
Cash $1.1 billion
Debt $27.0 million
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Outlook

Based on its year-to-date results and updated assumptions on May 7, the company narrowed its comparable and identical store sales growth ranges for the fiscal year, and raised its EPS range to $2.86 to $2.89. On a 52-week to 52-week basis, the company now expects sales growth of 12% to 14% and diluted earnings per share growth of 15% to 17%.

Competition

Whole Foods Market's competitors include The Kroger Co. (NYSE:KR). Here is a table comparing these two companies.

Company WFM KR Industry Average (Grocery Stores)
Market Cap: 19.14B 18.34B 15.85B
Employees: 74,000 343,000 151.00K
Qtrly Rev Growth (yoy): 0.13 0.13 0.15
Revenue: 12.52B 96.75B 32.84B
Gross Margin: 0.36 0.21 0.24
EBITDA: 1.17B 4.43B 2.26B
Operating Margin: 0.07 0.03 0.04
Net Income: 517.57M 1.48B N/A
EPS: 2.77 2.77 1.81
P/E: 37.29 12.71 26.72
PEG (5 yr expected): 1.86 1.70 1.82
P/S: 1.53 0.19 0.38
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Whole Foods Market 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 company has an insider ownership of 0.91%. The stock is trading at a P/E ratio of 37.29 and a forward P/E ratio of 30.04. The company has a book value of $19.11 per share and the stock has a dividend yield of 0.77%. 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.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within 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.