2 Healthcare Companies And 1 Consumer Goods Company With Recent Intensive Insider Selling

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 |  Includes: DLPH, PRGO, REGN
by: Markus Aarnio

There was intensive insider selling in Ironwood Pharmaceuticals (NASDAQ:IRWD) in March when the stock was trading above $18. The stock is currently trading at $14.39 or 26.8% below the all time high made in March.

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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. Perrigo Company (NYSE:PRGO) develops, manufactures, and distributes over-the-counter [OTC] and generic prescription [Rx] pharmaceuticals, infant formulas, nutritional products, and active pharmaceutical ingredients [API] worldwide.

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Insider selling by insider (last 30 days)

  • Joseph Papa sold 5,000 shares on May 15 pursuant to a Rule 10b5-1 sales plan. Joseph Papa currently holds 100,000 shares or 0.1% of the company. Joseph Papa joined the company in October 2006 as President and Chief Executive Officer.
  • Jatin Shah sold 3,672 shares on May 14 and currently holds 1,490 shares or less than 0.1% of the company. Jatin Shah was named Senior Vice President and Chief Scientific Officer in June 2005.
  • Sharon Kochan sold 2,647 shares on May 14 and currently holds 5,492 shares or less than 0.1% of the company. Sharon Kochan is Executive Vice President and General Manager, International.
  • Michael Stewart sold 4,092 shares on May 13 and currently holds 3,055 shares or less than 0.1% of the company. Michael Stewart was named Senior Vice President, Global Human Resources in September 2004.
  • Ran Gottfried sold 2,224 shares on May 13 and currently holds 11,609 shares or less than 0.1% of the company. Ran Gottfried has been a director of Perrigo since February 2006.
  • Judy Brown sold 2,500 shares on May 7 pursuant to a Rule 10b5-1 sales plan. Judy Brown currently holds 17,433 shares or less than 0.1% of the company. Judy Brown was named Executive Vice President and Chief Financial Officer in July 2006.
  • Todd Kingma sold 1,250 shares on May 3 pursuant to a Rule 10b5-1 sales plan. Todd Kingma currently holds 18,465 shares or less than 0.1% of the company. Todd Kingma was named Executive Vice President in May 2006.

Insider selling by calendar month

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

Month Insider selling / shares Insider buying / shares
May 2013 21,385 0
April 2013 14,072 0
March 2013 22,085 0
February 2013 8,328 0
January 2013 5,000 0
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There have been 70,870 shares sold and zero shares purchased this year.

Financials

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

Revenue $919.8 million
Net income $111.9 million
Cash $300.8 million
Debt $1.4 billion
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Outlook

The company expects fiscal 2013 reported earnings to be between $4.67 and $4.87 per diluted share as compared to $4.18 in fiscal 2012.

Competition

Perrigo's competitors include Actavis (ACT) and Dr. Reddy's Laboratories (NYSE:RDY). Here is a table comparing these companies.

Company PRGO ACT RDY
Market Cap: 11.27B 15.79B 6.55B
Employees: 8,800 17,700 15,000
Qtrly Rev Growth (yoy): 0.18 0.24 0.04
Revenue: 3.40B 6.29B 2.06B
Gross Margin: 0.36 0.47 0.53
EBITDA: 817.67M 1.45B 473.88M
Operating Margin: 0.20 0.13 0.18
Net Income: 430.51M -60.30M 273.40M
EPS: 4.65 -0.48 1.61
P/E: 25.76 N/A 24.01
PEG (5 yr expected): 1.76 1.06 1.14
P/S: 3.31 2.51 3.17
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Perrigo is trading at a higher P/S ratio than its direct competitors.

My analysis

There have been seven insider sell transactions and there have not been any insider buy transactions during the last 30 days. The company has an insider ownership of 0.27%. The stock is trading at a P/E ratio of 25.76 and a forward P/E ratio of 18.13. The company has a book value of $22.42 per share and the stock has a dividend yield of 0.30%. 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. Delphi Automotive (NYSE:DLPH) is a global supplier of electronics and technologies for automotive, commercial vehicle and other market segments.

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Insider selling by insider (last 30 days)

  • Lawrence Zimmerman sold 5,000 shares on May 15 pursuant to a Rule 10b5-1 trading plan. Lawrence Zimmerman currently holds 52,699 shares or less than 0.1% of the company. Lawrence Zimmerman has been a Director of the company since November 2009.
  • Gary Cowger sold 8,500 shares on May 1 pursuant to a Rule 10b5-1 trading plan. Gary Cowger currently holds 84,423 shares or less than 0.1% of the company. Gary Cowger has been a director of the company since November 2009.
  • Bernd Wiedemann sold 40,000 shares on April 26-29 pursuant to a Rule 10b5-1 trading plan. Bernd Wiedemann currently holds 35,423 shares or less than 0.1% of the company. Bernd Wiedemann has been a Director of the company since April 2010.
  • Mark Frissora sold 24,800 shares on April 25 pursuant to a Rule 10b5-1 trading plan. Mark Frissora currently controls 33,084 shares or less than 0.1% of the company. Mark Frissora has been a Director since December 2009.

Insider selling by calendar month

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

Month Insider selling / shares Insider buying / shares
May 2013 78,300 0
April 2013 13,700 0
March 2013 5,000 0
February 2013 5,000 0
January 2013 5,000 0
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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 $4.0 billion
Net income $276 million
Cash $830 million
Debt $2.5 billion
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Outlook

The company's guidance is as follows:

  Q2/2013 FY2013
Revenue $4.150 - $4.250 billion $16.200 - $16.600 billion
Adjusted Earnings Per Share $1.05 - $1.15 $4.15 - $4.41
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Competition

Delphi Automotive's competitors include Denso Corp. (OTCPK:DNZOY) and Magna International (NYSE:MGA). Here is a table comparing these companies.

Company DLPH DNZOY MGA Industry Average (Auto Parts)
Market Cap: 15.14B 37.04B 15.18B 7.36B
Employees: 118,000 N/A 119,000 7.31K
Qtrly Rev Growth (yoy): -0.02 0.08 0.09 0.09
Revenue: 15.45B 45.50B 31.53B 4.04B
Gross Margin: 0.17 0.16 0.12 0.33
EBITDA: 2.12B 5.64B 2.46B 280.32M
Operating Margin: 0.10 0.07 0.05 0.09
Net Income: 1.01B 2.31B 1.46B N/A
EPS: 3.16 1.44 6.20 3.57
P/E: 15.29 16.18 10.47 10.34
PEG (5 yr expected): 0.64 2.50 0.98 3.84
P/S: 0.95 0.81 0.47 0.75
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Delphi Automotive is trading above the industry average P/S ratio.

My analysis

There have been four insider sell transactions and there have not been any insider buy transactions during the last 30 days. The company has an insider ownership of 0.79%. The stock is trading at a P/E ratio of 15.29 and a forward P/E ratio of 9.55. The company has a book value of $7.67 per share and the stock has a dividend yield of 1.45%. 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. Regeneron Pharmaceuticals (NASDAQ:REGN), a biopharmaceutical company, discovers, invents, develops, manufactures, and commercializes medicines for the treatment of serious medical conditions in the United States and internationally.

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Insider selling by insider (last 30 days)

  • Michael Brown sold 15,000 shares on May 17 and currently holds 14,662 shares or less than 0.1% of the company. Michael Brown has been a Director of the company since June 1991.
  • Michael Aberman sold 13,863 shares on May 6-14 pursuant to a plan intended to comply with Rule 10b5-1(c). Michael Aberman currently holds 11,700 shares or less than 0.1% of the company. Michael Aberman is Vice President, Strategy and Investor Relations.
  • Neil Stahl sold 23,038 shares on May 13 and currently holds 48,988 shares or less than 0.1% of the company. Neil Stahl has been Senior Vice President, Research and Development Sciences since January 2007.
  • George Sing sold 5,000 shares on May 10 and currently holds 112,772 shares or 0.1% of the company. George Sing has been a director of the company since January 1988.
  • Robert Terifay sold 8,231 shares on May 8 and currently holds 15,324 shares or less than 0.1% of the company. Robert Terifay has been Senior Vice President, Commercial since joining the company in February 2007.
  • Alfred Gilman sold 30,000 shares on May 6 and currently holds zero shares of the company. Alfred Gilman, M.D., Ph.D., a co-founder of the company, has been Director of the company since July 1990.
  • Eric Shooter sold 30,000 shares on May 6 and currently controls 5,000 shares or less than 0.1% of the company. Eric Shooter, Ph.D., a co-founder of the company, has been a Director since 1988.
  • Marc Tessier-Lavigne sold 13,334 shares on May 6 and currently holds 26,666 options or less than 0.1% of the company. Marc Tessier-Lavigne, Ph.D., has been a Director of the company since November 2011.
  • Daniel Van Plew sold 13,725 shares on May 7 and currently holds 10,736 shares or less than of the company. Daniel Van Plew has been Senior Vice President and General Manager, Industrial Operations and Product Supply since April 2008.
  • Roy Vagelos sold 13,482 shares on May 6 and currently holds 432,282 shares or 0.4% of the company. Roy Vagelos, M.D., has been Chairman of the Board of the company since January 1995.
  • George Yancopoulos sold 100,000 shares on May 7 and currently holds 1,106,395 shares or 1.1% of the company. George Yancopoulos, M.D., Ph.D., joined the company in 1989 as its Founding Scientist and is currently President, Regeneron Laboratories and Chief Scientific Officer.
  • Leonard Schleifer sold 100,000 shares on May 1 pursuant to a plan intended to comply with Rule 10b5-1(c). Leonard Schleifer currently holds 42,087 shares or less than 0.1% of the company. Leonard Schleifer, M.D., Ph.D., founded the company in 1988, has been a Director and its President and Chief Executive Officer since its inception.
  • Douglas McCorkle sold 2,213 shares on May 2 pursuant to a plan intended to comply with Rule 10b5-1(c). Douglas McCorkle currently holds 4,000 shares or less than 0.1% of the company. Douglas McCorkle is Vice President, Controller & Assistant Treasurer.

Insider selling by calendar month

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

Month Insider selling / shares Insider buying / shares
May 2013 367,886 0
April 2013 8,129 0
March 2013 115,000 0
February 2013 10,000 0
January 2013 31,464 0
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The month of May has seen the most insider selling this year.

Financials

The company reported the first-quarter financial results on May 3 with the following highlights:

Revenue $439.7 million
Net income $98.9 million
Cash $663 million
Debt $462.7 million
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Outlook

Leonard S. Schleifer, M.D., Ph.D., President and Chief Executive Officer of Regeneron commented on May 3:

"EYLEA sales in the U.S. continue to enjoy strong growth and we are raising our estimate of full year U.S. EYLEA net sales to $1.25 to $1.325 billion in 2013. The ex-U.S. launch of EYLEA by our partner, Bayer HealthCare, is also going very well and resulted in a positive contribution to our earnings this quarter. Our broad, late-stage pipeline is making progress. We expect our first data from the alirocumab Phase 3 program for reducing LDL cholesterol in the second half of 2013. We reported positive data with our IL-4R inhibitor, dupilumab, in atopic dermatitis and additional data for dupilumab are expected in allergic asthma later this month."

Competition

Regeneron's competitors include Amgen (NASDAQ:AMGN), Novartis (NYSE:NVS) and Roche (OTCQX:RHHBY). Here is a table comparing these companies.

 

 

 

 

Company REGN AMGN NVS RHHBY Industry Average (Biotechnology)
Market Cap: 25.86B 79.22B 182.20B 214.26B 71.76B
Employees: 1,996 18,000 129,000 82,089 450.00
Qtrly Rev Growth (yoy): 0.90 0.05 0.02 0.12 0.27
Revenue: 1.59B 17.46B 57.80B 50.83B 13.93B
Gross Margin: 0.52 0.84 0.68 0.75 0.72
EBITDA: 626.49M 7.05B 17.15B 20.10B 1.51B
Operating Margin: 0.37 0.34 0.22 0.34 0.13
Net Income: 837.49M 4.60B 9.66B 10.22B N/A
EPS: 7.48 5.91 3.94 2.99 0.61
P/E: 35.70 17.88 18.82 21.13 18.43
PEG (5 yr expected): 2.14 1.54 2.77 2.31 1.51
P/S: 16.16 4.51 3.19 4.26 3.64
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Regeneron is trading above the industry average P/S ratio, but is also growing faster than the industry.

My analysis

There have been 14 insider sell transactions and there have not been any insider buy transactions during the last 30 days. The company has an insider ownership of 1.59%. The stock is trading at a P/E ratio of 35.70 and a forward P/E ratio of 44.35. The company has a book value of $14.52 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.

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.