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There was intensive insider selling in Garmin (NASDAQ:GRMN) from August 2007 to September 2007. The stock peaked at $125.68 in October 2007 and plunged all the way to $14.40 in November 2008 or 88.5% below the all time high made in October 2007.

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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. eBay (NASDAQ:EBAY) provides online platforms, services, and tools to help individuals and merchants in online and mobile commerce and payments in the United States and internationally.

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Insider selling by insider (last 30 days)

  • Alan Marks sold 4,000 shares on May 22 pursuant to a Rule 10b5-1 trading plan. Alan Marks currently holds 73,706 shares or less than 0.1% of the company. Alan Marks is Senior Vice President, Corporate Communications of eBay.
  • Mark Carges sold 136,171 shares on May 2-14 and currently holds 89,751 shares or less than 0.1% of the company. Mark Carges is Chief Technology Officer and Senior Vice President, Global Products, Marketplaces.
  • Elizabeth Axelrod sold 200,400 shares on May 10-14 and currently holds 209,301 shares or less than 0.1% of the company. Elizabeth Axelrod is Senior Vice President, Human Resources, eBay Inc.
  • John Donahoe sold 173,600 shares on May 9 pursuant to a Rule 10b5-1 trading plan. John Donahoe currently holds 511,842 shares or less than 0.1% of the company. John Donahoe is President and Chief Executive Officer of eBay.
  • Michael Jacobson sold 30,416 shares on April 25 pursuant to a Rule 10b5-1 trading plan. Michael Jacobson currently holds 488,891 shares or less than 0.1% of the company. Michael Jacobson is Senior Vice President, Legal Affairs, General Counsel and Secretary, eBay Inc.

Insider selling by calendar month

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

MonthInsider selling / sharesInsider buying / shares
May 2013514,1710
April 2013381,7070
March 201300
February 201342,3260
January 20131,121,8690

There have been 2,060,073 shares sold and zero shares purchased this year.

Financials

The company reported the first-quarter financial results on April 17 with the following highlights:

Revenue$3.7 billion
Net income$677 million
Cash$9.4 billion
Debt$4.5 billion

Outlook

  • Second quarter 2013 - eBay expects net revenues in the range of $3,800 - $3,900 million with GAAP earnings per diluted share in the range of $0.46 - $0.48 and non-GAAP earnings per diluted share in the range of $0.61 - $0.63.
  • Full year 2013 - eBay expects net revenues in the range of $16,000-$16,500 million with GAAP earnings per diluted share in the range of $2.23-$2.29 and non-GAAP earnings per diluted share in the range of $2.70-$2.75.

Competition

eBay's competitors include Amazon.com (NASDAQ:AMZN), Google (NASDAQ:GOOG) and Overstock.com (NASDAQ:OSTK). Here is a table comparing these companies.

CompanyEBAYAMZNGOOGOSTK
Market Cap:70.70B119.18B292.88B601.66M
Employees:30,00088,40053,8911,300
Qtrly Rev Growth (yoy):0.140.220.310.19
Revenue:14.54B63.98B53.50B1.15B
Gross Margin:0.700.250.580.18
EBITDA:4.31B2.71B16.81B32.40M
Operating Margin:0.210.010.250.01
Net Income:2.72B-87.00M11.22B19.65M
EPS:2.06-0.1933.420.82
P/E:26.45N/A26.4130.99
PEG (5 yr expected):1.375.391.330.70
P/S:4.861.865.470.52

eBay's P/S ratio is in the higher end compared to its direct competitors.

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 9.56%. The stock is trading at a P/E ratio of 26.45 and a forward P/E ratio of 16.92. The company has a book value of $16.30 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.

2. Garmin designs, develops, manufactures, and markets hand-held, portable and fixed-mount global positioning system [GPS] enabled products and other navigation, communication, and information products for the automotive/mobile, outdoor, fitness, marine, and general aviation markets worldwide.

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Insider selling by insider (last 30 days)

  • Donald Eller sold 2,432 shares on May 22 and currently controls 505,153 shares or 0.2% of the company. Donald Eller serves as a director of the company.
  • Gene Betts sold 2,993 shares on May 21 and currently holds 5,153 shares or less than 0.1% of the company. Gene Betts serves as a director of the company.
  • Pao-Chang Huang sold 11,478 shares on May 6 and currently holds 20,144 shares or less than 0.1% of the company. Pao-Chang Huang is General Manager of the company.

Insider selling by calendar month

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

MonthInsider selling / sharesInsider buying / shares
May 201316,9030
April 201300
March 2013100,0000
February 201300
January 201300

There have been 116,903 shares sold and zero shares purchased this year.

Financials

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

Revenue$532.0 million
Net income$88.7 million
Cash$1.2 billion

Outlook

The company's full year 2013 guidance is as follows:

Revenue$2.5 billion to $2.6 billion
Gross Margin53-54%
Operating Income$480-$500 million
Operating Margin19-20%
EPS (Pro Forma)$2.30 - $2.40

Competition

Here is a table comparing Garmin against the Scientific & Technical Instruments industry.

CompanyGRMNIndustry Average (Scientific & Technical Instruments)
Market Cap:6.83B57.96M
Employees:9,7772.15K
Qtrly Rev Growth (yoy):-0.040.06
Revenue:2.69B840.30M
Gross Margin:0.520.27
EBITDA:659.71M130.32M
Operating Margin:0.210.02
Net Income:544.21MN/A
EPS:2.770.22
P/E:12.6019.85
PEG (5 yr expected):2.842.15
P/S:2.571.76

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

My analysis

There have been three insider sell transactions and there have not been any insider buy transactions during the last 30 days. The company has an insider ownership of 4.61%. The stock is trading at a P/E ratio of 12.60 and a forward P/E ratio of 14.85. The company has a book value of $18.49 per share and the stock has a dividend yield of 5.09%. The stock has a $21 price target from the Point and Figure chart. I believe there is an opportunity for a short entry with the $21 target price. I would place a stop loss at $43, which is the six month high. The two main reasons for the proposed short entry are relatively high P/S ratio and the intensive insider selling activity.

3. SS&C Technologies Holdings (NASDAQ:SSNC) provides software products and software-enabled services to financial services providers worldwide.

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Insider selling by insider (last 30 days)

  • Rahul Kanwar sold 102,220 shares on May 16-17 and currently holds 58,000 options or less than 0.1% of the company. Rahul Kanwar is Senior Vice President and Managing Director, Alternative Assets.
  • Tc Group IV, L.P. sold 7,500,000 shares on May 14 pursuant to a secondary offering. Tc Group IV, L.P. currently controls 7,469,799 shares or 9.2% of SS&C Technologies.
  • Patrick Pedonti sold 15,000 shares on May 1 pursuant to a 10b5-1 trading plan. Patrick Pedonti currently holds 105,031 options or 0.1% of the company. Patrick Pedonti has served as SS&C's Senior Vice President and Chief Financial Officer since August 2002.

Insider selling by calendar month

Here is a table of SS&C's insider trading activity by calendar month.

MonthInsider selling / sharesInsider buying / shares
May 20137,617,2200
April 201315,0000
March 20137,795,0000
February 201300
January 201300

There have been 15,427,220 shares sold and zero shares purchased this year.

Financials

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

Revenue$173.2 million
Net income$21.4 million
Cash$68.8 million
Debt$976.0 million

Outlook

The company's guidance is as follows:

 Q2 2013FY 2013
Adjusted Revenue ($M)$175.0 - $179.0$712.0 - $722.0
Adjusted Net Income ($M)$38.3 - $39.3$157.0 - $160.0
Cash from Operating Activities ($M)N/A$171.0 - $177.0
Capital Expenditures (% of revenue)N/A2.4% - 2.8%

Competition

SS&C's competitors include DST Systems (NYSE:DST) and State Street Corporation (NYSE:STT). Here is a table comparing these companies.

CompanySSNCDSTSTTIndustry Average (Business Software & Services)
Market Cap:2.56B3.01B29.38B55.16M
Employees:4,08611,92529,500193.00
Qtrly Rev Growth (yoy):0.850.050.010.00
Revenue:631.39M2.61B9.67B71.50M
Gross Margin:0.440.16N/A0.24
EBITDA:243.12M382.30MN/A1.00M
Operating Margin:0.240.100.300.08
Net Income:49.37M361.90M2.06BN/A
EPS:0.597.894.340.27
P/E:53.268.7014.8312.87
PEG (5 yr expected):1.371.581.26N/A
P/S:4.101.163.052.55

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

My analysis

There have been three insider sell transactions and there have not been any insider buy transactions during the last 30 days. The company has an insider ownership of 15.44%. The stock is trading at a P/E ratio of 53.26 and a forward P/E ratio of 15.29. The company has a book value of $13.82 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.

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