1 Financial, 1 Healthcare And 1 Tech Stock With Recent Intensive Insider Selling

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 |  Includes: ADVS, MOH, NTRS
by: Markus Aarnio

There was intensive insider selling in Rackspace Hosting (NYSE:RAX) in January when the stock was trading above $75. The stock is currently trading at $39.68 or 51.2% below the all-time high made in January.

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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. Northern Trust Corporation (NASDAQ:NTRS) provides asset servicing, fund administration, asset management, fiduciary, and banking solutions worldwide.

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Insider selling by insider (last 30 days)

  • Steven Fradkin sold 60,834 shares on May 17 pursuant to a written plan adopted in accordance with SEC Rule 10b5-1. Steven Fradkin currently holds 62,250 shares or less than 0.1% of the company. Steven Fradkin is President, Corporate and Institutional Services.
  • Joyce St. Clair sold 15,000 shares on May 14-17 pursuant to a written plan adopted in accordance with SEC Rule 10b5-1. Joyce St. Clair currently holds 42,840 shares or less than 0.1% of the company. Joyce St. Clair is President, Operations & Technology.
  • Biff Bowman sold 6,000 shares on May 17 pursuant to a written plan adopted in accordance with SEC Rule 10b5-1. Biff Bowman currently holds 29,697 shares or less than 0.1% of the company. Biff Bowman is Executive Vice President, Head of Human Resources.
  • Kelly Welsh sold 50,000 shares on May 15 pursuant to a written plan adopted in accordance with SEC Rule 10b5-1. Kelly Welsh currently holds 41,179 shares or less than 0.1% of the company. Kelly Welsh is Executive Vice President and General Counsel.
  • Frederick Waddell sold 30,000 shares on May 15 pursuant to a written plan adopted in accordance with SEC Rule 10b5-1. Frederick Waddell currently holds 257,579 shares or 0.1% of the company. Frederick Waddell is Chairman of the Board and Chief Executive Officer.
  • Stephen Potter sold 30,000 shares on May 15 pursuant to a written plan adopted in accordance with SEC Rule 10b5-1. Stephen Potter currently holds 59,640 shares or less than 0.1% of the company. Stephen Potter is President, Northern Trust Global Investments.
  • Richard Kukla sold 2,000 shares on April 29 and currently holds 30,999 shares or less than 0.1% of the company. Richard Kukla is Controller of the company.

Insider selling by calendar month

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

Month Insider selling / shares Insider buying / shares
May 2013 191,834 0
April 2013 76,031 0
March 2013 61,000 0
February 2013 60,000 0
January 2013 112,552 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 April 16 with the following highlights:

Net income $164.0 million
Book value $31.82 per share
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Competition

Northern Trust's competitors include The Bank of New York Mellon Corporation (NYSE:BK), JPMorgan Chase & Co. (NYSE:JPM) and State Street Corporation (NYSE:STT). Here is a table comparing these companies.

Company NTRS BK JPM STT Industry Average (Asset Management)
Market Cap: 13.94B 35.33B 198.18B 29.72B 9.02B
Employees: 14,200 49,700 255,898 29,500 1.16K
Qtrly Rev Growth (yoy): 0.01 -0.00 0.01 0.01 0.00
Revenue: 3.88B 14.63B 91.94B 9.67B 2.23B
Operating Margin: 0.26 0.28 0.37 0.30 0.24
Net Income: 679.70M 1.51B 21.43B 2.06B N/A
EPS: 2.82 1.29 5.60 4.34 0.24
P/E: 20.68 23.67 9.34 15.02 17.03
PEG (5 yr expected): 1.21 1.05 1.28 1.23 1.29
P/S: 3.52 2.37 2.10 3.01 4.00
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Northern Trust's P/E ratio is higher than the industry average.

My analysis

There have been eight insider sell transactions and there have not been any insider buy transactions during the last 30 days. The company has an insider ownership of 0.41%. The stock is trading at a P/E ratio of 20.68 and a forward P/E ratio of 16.28. The company has a book value of $31.82 per share and the stock has a dividend yield of 2.13%. 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.

2. Molina Healthcare (NYSE:MOH) provides Medicaid-related solutions to meet the healthcare needs of low-income families and individuals, as well as to assist state agencies in their administration of the Medicaid program.

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Insider selling by insider (last 30 days)

  • Terry Bayer sold 8,439 shares on May 17 and currently holds 133,239 shares or 0.3% of the company. Terry Bayer is Chief Operating Officer for Molina Healthcare.
  • Steven Orlando sold 15,000 shares on May 15 and currently holds 47,250 shares or 0.1% of the company. Steven Orlando serves as a director of the company.
  • John Szabo sold 9,000 shares on May 13 and currently holds 27,000 shares or less than 0.1% of the company. John Szabo serves as a director of the company.
  • Frank Murray sold 6,000 shares on May 13 and currently holds 18,125 shares or less than 0.1% of the company. Frank Murray serves as a director of the company.

Insider selling by calendar month

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

Month Insider selling / shares Insider buying / shares
May 2013 38,439 0
April 2013 0 0
March 2013 0 7,000
February 2013 85,000 0
January 2013 15,000 0
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There have been 138,439 shares sold and 7,000 shares purchased this year.

Financials

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

Revenue $1.6 billion
Net income $29.9 million
Cash $1.5 billion
Debt $643.2 million
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Outlook

The company's full-year 2013 earnings guidance is $1.55 per diluted share.

Competition

Molina's competitors include Centene Corp. (NYSE:CNC), UnitedHealth Group (NYSE:UNH) and WellPoint Inc. (WLP). Here is a table comparing these companies.

Company MOH CNC UNH WLP
Market Cap: 1.73B 2.82B 64.10B 23.37B
Employees: 5,800 6,800 133,000 43,500
Qtrly Rev Growth (yoy): 0.16 0.54 0.11 0.15
Revenue: 6.25B 9.64B 113.68B 63.98B
Gross Margin: 0.16 0.14 0.27 0.22
EBITDA: 113.82M 95.75M 10.01B 5.44B
Operating Margin: 0.01 0.00 0.08 0.07
Net Income: 21.62M 883.00K 5.33B 2.68B
EPS: 0.45 0.01 5.13 8.48
P/E: 83.79 8,643.33 12.24 9.18
PEG (5 yr expected): 1.60 1.22 1.04 0.84
P/S: 0.28 0.29 0.56 0.36
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Molina has the lowest P/S ratio among these four companies.

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 4.78%. The stock is trading at a P/E ratio of 83.79 and a forward P/E ratio of 16.68. The company has a book value of $16.82 per share. 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. Advent Software (NASDAQ:ADVS) provides software products and services for automating and integrating data and work flows across the investment management organization, as well as between the investment management organization and external parties worldwide.

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Insider selling by insider (last 30 days)

  • Todd Gottula sold 3,786 shares on April 30 - May 17 pursuant to a Rule 10b5-1 plan. Todd Gottula currently holds 34,586 shares or less than 0.1% of the company. Todd Gottula is Executive Vice President and Chief Technology Officer.
  • Christopher Momsen sold 16,952 shares on April 29 - May 15 pursuant to a Rule 10b5-1 plan. Christopher Momsen currently holds 58,754 shares or 0.1% of the company. Christopher Momsen is Executive Vice President, Sales and Solutions Management.
  • Anthony Sperling sold 3,500 shares on May 15 pursuant to a Rule 10b5-1 plan. Anthony Sperling currently holds 76,463 shares or 0.1% of the company. Anthony Sperling is Executive Vice President, Global Client Experience.
  • Spo Advisory Corp sold 7,542,279 shares on May 10 and currently holds 8,198,921 shares or 16.0% of Advent Software.

Insider selling by calendar month

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

Month Insider selling / shares Insider buying / shares
May 2013 7,550,232 0
April 2013 16,285 0
March 2013 10,996 0
February 2013 46,143 0
January 2013 45,940 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 April 29 with the following highlights:

Revenue $92.5 million
Net income $12.1 million
Cash $247 million
Debt $93 million
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Outlook

The company's guidance is as follows:

Q2/2013 FY2013
Revenue $93-$95 million $373-$379 million
Operating cash flow - $93-$97 million
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Competition

Advent Software's competitors include DST Systems (NYSE:DST) and SS&C Technologies Holdings (NASDAQ:SSNC). Here is a table comparing these companies.

Company ADVS DST SSNC Industry Average (Application Software)
Market Cap: 1.64B 3.13B 2.59B 470.39M
Employees: 1,222 11,925 4,086 778.00
Qtrly Rev Growth (yoy): 0.06 0.05 0.85 1.32
Revenue: 364.40M 2.61B 631.39M 91.77M
Gross Margin: 0.69 0.16 0.44 0.73
EBITDA: 82.73M 382.30M 243.12M 28.63M
Operating Margin: 0.16 0.10 0.24 0.22
Net Income: 34.97M 361.90M 49.37M N/A
EPS: 0.67 7.89 0.59 0.20
P/E: 47.34 9.04 54.05 25.78
PEG (5 yr expected): 1.70 1.58 1.37 0.70
P/S: 4.50 1.20 4.10 5.13
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Advent Software is trading above the industry average P/E ratio.

My analysis

There have been six insider sell transactions and there have not been any insider buy transactions during the last 30 days. The company has an insider ownership of 0.61%. There are zero analyst buy ratings, three neutral ratings and two sell ratings, with an average target price of $28.60. The stock is trading at a P/E ratio of 47.34 and a forward P/E ratio of 23.12. The company has a book value of $6.46 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 bearish analyst target prices 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.