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There was intensive insider selling in Matrix Service Company (NASDAQ:MTRX) in April 2007 when the stock was trading above $25. The stock peaked at $30.36 in November 2007 and plunged all the way to $5.00 in January 2009.

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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. United Therapeutics Corporation (NASDAQ:UTHR), a biotechnology company, engages in the development and commercialization of therapeutic products for patients with chronic and life-threatening diseases in the United States and internationally.

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Insider selling by insider (last 30 days)

  • John Ferrari sold 9,000 shares on May 16 - June 6 pursuant to a Rule 10b5-1 trading plan. John Ferrari currently holds 38,750 share tracking awards or less than 0.1% of the company. John Ferrari is Chief Financial Officer & Treasurer of the company.
  • Paul Mahon sold 12,000 shares on May 16 - June 6 pursuant to a Rule 10b5-1 trading plan. Paul Mahon currently holds 34,490 shares and 146,000 options or 0.4% of the company. Paul Mahon is Executive Vice President, General Counsel & Corporate Secretary.
  • Raymond Dwek sold 3,000 shares on June 6 pursuant to a Rule 10b5-1 trading plan. Raymond Dwek currently holds 17,000 options or less than 0.1% of the company. Raymond Dwek serves as a director of the company.
  • Christopher Causey sold 1,500 shares on June 6 pursuant to a Rule 10b5-1 trading plan. Christopher Causey currently holds 733 shares and 16,500 options or less than 0.1% of the company. Christopher Causey serves as a director of the company.
  • Roger Jeffs sold 10,000 shares on May 17 pursuant to a Rule 10b5-1 trading plan. Roger Jeffs currently controls 26,533 shares and 138,250 options or 0.3% of the company. Roger Jeffs is President and Chief Operating Officer.

Insider selling by calendar month

Here is a table of United Therapeutics' insider trading activity by calendar month.

MonthInsider selling / sharesInsider buying / shares
June 201315,0000
May 201353,5000
April 201347,0000
March 201392,1660
February 201326,0000
January 201331,2490

There have been 264,915 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$245.1 million
Net income$62.3 million
Cash$876.8 million
Debt$277.7 million

Outlook

The company reaffirmed its 2013 full-year revenue guidance on April 25 for its three commercial products (Remodulin, Tyvaso and Adcirca). The company continues to expect related revenues to fall within a range of 5% above or below $1.0 billion for 2013.

Pipeline

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Competition

United Therapeutics' competitors include Gilead Sciences (NASDAQ:GILD) and Pfizer (NYSE:PFE). Here is a table comparing these companies.

CompanyUTHRGILDPFEIndustry Average (Drug Manufacturers - Other)
Market Cap:3.33B80.68B200.45B32.64B
Employees:6235,00089,40035.15K
Qtrly Rev Growth (yoy):0.200.11-0.091.74
Revenue:955.00M9.95B57.60B13.93B
Gross Margin:0.870.750.810.83
EBITDA:442.41M4.35B25.34B5.72B
Operating Margin:0.430.410.320.20
Net Income:296.01M2.87B10.52BN/A
EPS:5.621.792.092.00
P/E:11.9329.6113.5324.04
PEG (5 yr expected):0.271.004.681.15
P/S:3.377.873.463.04

United Therapeutics' P/S ratio is in line with the industry average.

My analysis

There have been five different insiders selling the shares and there have not been any insiders buying the shares during the past 30 days. The company has an insider ownership of 0.11%. There are four analyst buy ratings, 11 neutral ratings and two sell ratings, with an average target price of $55.17. The stock is trading at a P/E ratio of 11.93 and a forward P/E ratio of 9.37. The company has a book value of $23.11 per share. The stock has a $58 price target from the Point and Figure chart. I believe there is an opportunity for a short entry with the $58 price target. I would place a stop loss at $70, which is the 52 -week high. The three main reasons for the proposed short entry are bearish analyst target prices, bearish Point and Figure chart and the intensive insider selling activity.

2. Shutterfly (NASDAQ:SFLY) provides an Internet-based social expression and personal publishing service that enables consumers to share, print, and preserve their digital photos through the medium of photography in the United States.

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Insider selling by insider (last 30 days)

  • Dwayne Black sold 10,000 shares on June 7 pursuant to a Rule 10b5-1 trading plan. Dwayne Black currently holds 66,237 shares or 0.2% of the company. Dwayne Black is Senior Vice President of Operations.
  • Stephen Killeen sold 16,778 shares on May 20 - June 7 pursuant to a Rule 10b5-1 trading plan. Stephen Killeen currently holds 19,959 shares or less than 0.1% of the company. Stephen Killeen serves as a director of the company.
  • Brian Manca sold 4,382 shares on June 7 pursuant to a Rule 10b5-1 trading plan. Brian Manca currently holds 27,000 shares or less than 0.1% of the company. Brian Manca is Vice President, Chief Accounting Officer.
  • Peter Navin sold 9,375 shares on June 7 pursuant to a Rule 10b5-1 trading plan. Peter Navin currently holds 22,500 shares or less than 0.1% of the company. Peter Navin is Senior Vice President, Human Resources.
  • John Boris sold 15,884 shares on May 17 pursuant to a Rule 10b5-1 trading plan. John Boris currently holds 100,500 shares or 0.3% of the company. John Boris is Senior Vice President and Chief Marketing Officer.

Insider selling by calendar month

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

MonthInsider selling / sharesInsider buying / shares
June 201338,7570
May 201325,9330
April 2013210,7590
March 2013149,1390
February 2013617,3410
January 20137,8440

There have been 1,049,773 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$116.7 million
Net loss$12.4 million
Cash$164.5 million

Outlook

Second Quarter 2013:

  • Net revenues to range from $118.0 million to $121.2 million, a year-over-year increase of 19.2% to 22.4%.
  • GAAP net loss per diluted share to range from ($0.55) to ($0.58).

Full Year 2013:

  • Net revenues to range from $766.0 million to $771.0 million, a year-over-year increase of 19.6% to 20.4%.
  • GAAP net income per diluted share to range from $0.20 to $0.30.

Competition

Here is a table comparing Shutterfly to the internet information providers industry.

CompanySFLYIndustry Average (Internet Information Providers)
Market Cap:1.98B2.07B
Employees:1,10720.88K
Qtrly Rev Growth (yoy):0.281.71
Revenue:666.04M420.42M
Gross Margin:0.540.72
EBITDA:83.30M32.31M
Operating Margin:0.050.19
Net Income:20.63MN/A
EPS:0.540.37
P/E:96.6521.79
PEG (5 yr expected):10.160.68
P/S:2.784.81

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

My analysis

There have been five different insiders selling the shares and there have not been any insiders buying the shares during the past 30 days. The company has an insider ownership of 2.84%. The stock is trading at a P/E ratio of 96.65 and a forward P/E ratio of 52.72. The company has a book value of $18.80 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 high P/E ratio and the intensive insider selling activity.

3. Matrix Service Company provides engineering, fabrication, construction, and maintenance services primarily to oil, gas, power, petrochemical, industrial, and mining and minerals markets principally in the United States and Canada.

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Insider selling by insider (last 30 days)

  • James Ryan sold 10,000 shares on June 6 and currently holds 80,271 shares and 21,900 options or 0.4% of the company. James Ryan has served as President of Matrix Service since August 2005.
  • Nancy Austin sold 4,400 shares on May 20 and currently holds 32,271 shares or 0.1% of the company. Nancy Austin has served as Vice President Human Resources since January 2006.
  • Paul Lackey sold 5,000 shares on May 14 and currently holds 29,500 shares or 0.1% of the company. Paul Lackey serves as a director of the company.

Insider selling by calendar month

Here is a table of Matrix Service Company's insider trading activity by calendar month.

MonthInsider selling / sharesInsider buying / shares
June 201310,0000
May 20139,4000
April 201300
March 201300
February 201331,9690
January 201300

There have been 51,369 shares sold and zero shares purchased this year.

Financials

The company reported the fiscal 2013 third-quarter, which ended March 31, financial results on May 8 with the following highlights:

Revenue$226.0 million
Net income$6.5 million
Cash$50.7 million

Outlook

The company updated its fiscal 2013 revenue guidance on May 8 to between $860 million and $890 million from previous guidance of $840 million to $890 million and updated earnings per fully diluted share guidance to between $0.87 and $0.94 from previous guidance of $0.83 to $0.98.

Competition

Matrix Service Company's competitors include Chicago Bridge & Iron Company N.V. (NYSE:CBI) and Halliburton Company (NYSE:HAL). Here is a table comparing these companies.

CompanyMTRXCBIHALIndustry Average (Heavy Construction)
Market Cap:440.60M6.49B40.23B104.93B
Employees:2,69226,80073,00033.78K
Qtrly Rev Growth (yoy):0.230.870.020.16
Revenue:841.88M6.54B28.61B4.49B
Gross Margin:0.100.120.150.21
EBITDA:43.56M588.19M5.73B485.49M
Operating Margin:0.040.080.140.12
Net Income:18.43M275.78M1.93BN/A
EPS:0.702.772.144.16
P/E:24.1421.8820.1327.11
PEG (5 yr expected):1.830.670.781.91
P/S:0.520.991.380.51

Matrix Service Company's P/S ratio is in line with the industry average.

My analysis

There have been three different insiders selling the shares and there have not been any insiders buying the shares during the past 30 days. The company has an insider ownership of 1.95%. The stock is trading at a P/E ratio of 24.14 and a forward P/E ratio of 14.20. The company has a book value of $8.82 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.

Source: 1 Healthcare, 1 Tech And 1 Industrial Goods Company With Recent Intensive Insider Selling