Seeking Alpha
Long/short equity, insider ownership
Profile| Send Message| ()  

There was intensive insider selling in Green Mountain Coffee Roasters (GMCR) in August 2011. The stock peaked at $115.98 on September 20, 2011 and plunged all the way to $17.11 on July 23, 2012 or 85.2% below the all time high made in September 2011.

(click to enlarge)

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. PS Business Parks (PSB), a real estate investment trust [REIT], engages in the acquisition, development, ownership, and operation of commercial properties primarily multi-tenant flex, office, and industrial space.

(click to enlarge)

Insider selling by insider (last 30 days)

  • Joseph Russell sold 19,800 shares on May 13-16, and currently holds 33,850 shares or 0.1% of the company. Joseph Russell was named Chief Executive Officer and a director of PS Business Parks in 2003. He had served as the company's President since 2002.
  • John Petersen sold 4,000 shares on May 16-17, and currently holds 9,218 shares or less than 0.1% of the company. John Petersen is Executive Vice President, Chief Operating Officer of the company.
  • James Kropp sold 1,500 shares on May 16, and currently holds 6,934 shares or less than 0.1% of the company. James Kropp serves as a director of the company.
  • Edward Stokx sold 6,000 shares on May 15, and currently holds 6,264 shares or less than 0.1% of the company. Edward Stokx has served as Chief Financial Officer and Secretary for PS Business Parks since 2003.

Insider selling by calendar month

Here is a table of PS Business Parks' insider trading activity by calendar month.

MonthInsider selling / sharesInsider buying / shares
May 201331,3000
April 201300
March 201316,0000
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 6, with the following highlights:

Funds from operations [FFO]$38.1 million
Cash$8.1 million
Debt$340.0 million

Competition

PS Business Parks' competitors include Alexandria Real Estate Equities (ARE), Brandywine Realty Trust (BDN) and First Industrial Realty Trust (FR). Here is a table comparing these companies.

CompanyPSBAREBDNFRIndustry Average (REIT - Diversified)
Market Cap:2.08B4.93B2.28B2.00B3.65B
Employees:161217391173250.00
Qtrly Rev Growth (yoy):0.040.110.060.040.00
Revenue:350.63M600.74M567.90M334.71M560.72M
Gross Margin:0.670.700.610.680.90
EBITDA:226.57M370.23M325.94M208.74M360.42M
Operating Margin:0.330.300.240.260.51
Net Income:23.84M73.32M-38.27M-29.33MN/A
EPS:1.021.15-0.10-0.252.19
P/E:83.4767.36N/AN/A3.69
PEG (5 yr expected):2.892.423.1618.04N/A
P/S:5.948.204.015.976.50

PS Business Parks' P/S ratio is in line with the industry average.

My analysis

There have been five insider sell transactions and there have not been any insider buy transactions during the last 30 days. The company has an insider ownership of 0.25%. There is one analyst buy rating, three neutral ratings and zero sell ratings, with an average target price of $74.00. The stock is trading at a P/E ratio of 83.47 and a forward P/E ratio of 48.07. The company has a book value of $63.81 per share and the stock has a dividend yield of 2.06%. 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.

2. Green Mountain Coffee Roasters engages in the specialty coffee and coffeemaker businesses in the United States and Canada.

(click to enlarge)

Insider selling by insider (last 30 days)

  • Jules Del Vecchio sold 20,500 shares on May 17, and currently holds 281,903 shares or 0.2% of the company. Jules Del Vecchio serves as a director of the company.
  • David Moran sold 4,000 shares on May 14, pursuant to a Rule 10b5-1 trading plan. David Moran currently holds 4,614 shares or less than 0.1% of the company. David Moran serves as a director of the company.
  • Michelle Stacy sold 8,000 shares on May 14, pursuant to a Rule 10b5-1 trading plan. Michelle Stacy currently holds 62,750 options or less than 0.1% of the company. Michelle Stacy is President, U.S. Commercial.
  • Stephen Sabol sold 30,000 shares on May 14, and currently holds 37,500 options or less than 0.1% of the company. Stephen Sabol is Vice President, Development.
  • Richard McCreary sold 227,000 shares on May 13, and currently holds 296,877 shares or 0.2% of the company. Richard McCreary is Former President, SCBU.
  • Sylvain Toutant sold 10,000 shares on May 13, and currently holds 10,000 options or less than 0.1% of the company. Sylvain Toutant was appointed President of GMCR's Canadian business unit in October 2012.
  • Gerard Geoffrion sold 10,000 shares on May 13, and currently holds 25,000 options or less than 0.1% of the company. Gerard Geoffrion was named President, International Business Development for GMCR in October 2012.
  • Michael Mardy sold 20,500 shares on May 9, pursuant to a Rule 10b5-1 trading plan. Michael Mardy currently holds 7,934 shares or less than 0.1% of the company. Michael Mardy serves as a director of the company.
  • Lawrence Blanford sold 108,000 shares on May 1-9, pursuant to a Rule 10b5-1 trading plan. Lawrence Blanford currently holds 562,789 options or 0.4% of the company. Lawrence Blanford serves as a director of the company.

Insider selling by calendar month

Here is a table of Green Mountain Coffee Roasters' insider trading activity by calendar month.

MonthInsider selling / sharesInsider buying / shares
May 2013438,0000
April 2013270,0000
March 201335,0000
February 201370,0000
January 2013100,0000

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 8, with the following highlights:

Revenue$1.0 billion
Net income [GAAP]$132.4 million
Cash$221.2 million
Debt$350.8 million

Outlook

The company's outlook for its third quarter of fiscal year 2013 is as follows:

  • Net sales growth in the range of 11% to 15% over the third quarter of fiscal year 2012.
  • Non-GAAP earnings per diluted share in a range of $0.71 to $0.78, an increase of 37% to 50% over the prior year period.

The company's outlook for its fiscal year 2013 is as follows:

  • Net sales growth in the range of 11% to 14% over fiscal year 2012.
  • Non-GAAP earnings per diluted share of $3.05 to $3.15, representing a growth rate of 27% to 31% over the $2.40 earnings per diluted share in fiscal 2012.

Competition

Green Mountain Coffee Roasters' competitors include Farmer Brothers Co. (FARM) and Starbucks Corporation (SBUX). Here is a table comparing these companies.

CompanyGMCRFARMSBUXIndustry Average (Processed & Packaged Goods)
Market Cap:11.97B238.37M47.79B31.97B
Employees:5,8001,821160,00035.00K
Qtrly Rev Growth (yoy):0.140.040.110.11
Revenue:4.16B502.15M14.02B17.43B
Gross Margin:0.350.380.570.37
EBITDA:881.57M26.73M2.59B3.50B
Operating Margin:0.16-0.010.140.14
Net Income:405.19M-17.76M1.51BN/A
EPS:2.60-1.141.971.99
P/E:30.87N/A32.4321.33
PEG (5 yr expected):1.26-3.911.572.84
P/S:2.880.473.411.81

Green Mountain Coffee Roasters' P/S ratio is above the industry average, which could explain some of the insider selling.

My analysis

There have been 10 insider sell transactions and there have not been any insider buy transactions during the last 30 days. The company has an insider ownership of 6.11%. There are 10 analyst buy ratings, two neutral ratings and one sell rating, with an average target price of $78.40. The stock is trading at a P/E ratio of 30.87 and a forward P/E ratio of 22.28. The company has a book value of $16.03 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.

3. Amgen (AMGN), a biotechnology medicines company, engages in the discovery, development, manufacture, and marketing of human therapeutic products in the areas of supportive cancer care, inflammation, nephrology, and bone diseases primarily in the United States, Europe, and Canada.

(click to enlarge)

Insider selling by insider (last 30 days)

  • Rebecca Henderson sold 8,421 shares on May 17, and currently holds 5,477 shares or less than 0.1% of the company. Rebecca Henderson serves as a director of the company.
  • Cynthia Patton sold 3,544 shares on May 16, and currently holds 15,442 shares or less than 0.1% of the company. Cynthia Patton serves as senior vice president and chief compliance officer of the company.
  • Judith Pelham sold 25,000 shares on May 14, and currently holds 23,149 shares or less than 0.1% of the company. Judith Pelham has served as a director of the company since May 1995.
  • Frank Biondi sold 10,000 shares on May 14, and currently holds 29,780 shares or less than 0.1% of the company. Frank Biondi has served as a director of the company since January 2002.
  • Sean Harper sold 8,000 shares on May 2, and currently holds 64,180 shares or less than 0.1% of the company. Sean Harper became executive vice president, Research and Development in February 2012.
  • Brian McNamee sold 35,586 shares on April 24-26, and currently holds 54,643 shares or less than 0.1% of the company. Brian McNamee joined Amgen as senior vice president, Human Resources in June 2001.

Insider selling by calendar month

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

MonthInsider selling / sharesInsider buying / shares
May 201354,9650
April 201335,5860
March 201300
February 20135,8860
January 201300

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

Financials

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

Revenue$4.2 billion
Net income$1.4 billion
Cash$21.3 billion
Debt$23.9 billion

Outlook

For the full year 2013, the company expects:

  • Total revenue at $17.8 billion to $18.2 billion.
  • Adjusted EPS to be above the midpoint of the range of $7.05-$7.35.

Competition

Amgen's competitors include Johnson & Johnson (JNJ), Novartis (NVS) and Teva Pharmaceutical Industries (TEVA). Here is a table comparing these companies.

CompanyAMGNJNJNVSTEVAIndustry Average (Biotechnology)
Market Cap:77.38B247.72B183.77B34.01B71.76B
Employees:18,000127,600129,00045,948450.00
Qtrly Rev Growth (yoy):0.050.090.02-0.040.27
Revenue:17.46B68.59B57.80B20.12B13.93B
Gross Margin:0.840.680.680.530.72
EBITDA:7.05B21.74B17.15B5.72B1.51B
Operating Margin:0.340.260.220.210.13
Net Income:4.60B10.44B9.66B1.73BN/A
EPS:5.913.683.942.000.61
P/E:17.4823.9318.8819.9018.43
PEG (5 yr expected):1.582.542.761.261.51
P/S:4.393.603.151.703.64

Amgen 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 company has an insider ownership of 0.13%. The stock is trading at a P/E ratio of 17.48 and a forward P/E ratio of 12.37. The company has a book value of $26.00 per share and the stock has a dividend yield of 1.84%. 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.

Source: 1 Biotech, 1 Financial And 1 Consumer Goods Company With Recent Intensive Insider Selling