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A study (pdf) titled "Predictive and Statistical Properties of Insider Trading" by James H. Lorie and Victor Niederhoffer reached the following conclusion:

Insiders tend to sell more than usual before price decreases.

In the study intensive insider selling was 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. NetApp (NTAP) engages in design, manufacture, marketing, and technical support of networked storage solutions.

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Insider selling by insider (last 30 days)

  • Thomas Georgens sold 121,122 shares on June 5-7, and currently holds 495,834 options or 0.1% of the company. Thomas Georgens is president and chief executive officer and a member of the Board of Directors of NetApp.
  • Nicholas Noviello sold 4,496 shares on June 4, pursuant to a Rule 10b5-1 trading plan. Nicholas Noviello currently holds 21,132 shares, 100,000 options and 67,725 restricted stock units or less than 0.1% of the company. Nicholas Noviello is executive vice president, Finance and Chief Financial Officer.
  • Daniel Warmenhoven sold 18,425 shares on June 3, pursuant to a Rule 10b5-1 trading plan. Daniel Warmenhoven currently controls 2,242,011 shares, 281,098 options and 46,175 restricted stock units or 0.7% of the company. Daniel Warmenhoven is executive chairman of the Board of Directors.
  • Robert Salmon sold 53,732 shares on May 23 - June 3, and currently controls 43,725 shares, 117,813 options and 86,750 restricted stock units or less than 0.1% of the company. Robert Salmon is the executive vice president of worldwide Field Operations for NetApp.

Insider selling by calendar month

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

MonthInsider selling / sharesInsider buying / shares
June 2013160,9970
May 2013583,9310
April 201397,1520
March 2013133,5790
February 2013229,1430
January 201382,3440

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

Financials

The company reported the full fiscal year 2013, which ended April 26, financial results on May 21, with the following highlights:

Revenue$6.3 billion
Net income$505 million
Cash$7.0 billion
Debt$2.3 billion

Outlook

NetApp's guidance for the first quarter of fiscal year 2014 is as follows:

  • Revenues to be in the range of $1.475 billion to $1.575 billion.
  • GAAP earnings per share to be approximately $0.13 to $0.18 and non-GAAP earnings per share to be approximately $0.45 to $0.50.
  • Outstanding share count to decrease to approximately 367 million shares.

Competition

NetApp's competitors include EMC Corporation (EMC) and Hewlett-Packard (HPQ). Here is a table comparing these companies.

CompanyNTAPEMCHPQ
Market Cap:13.62B51.97B48.01B
Employees:13,06060,000331,800
Qtrly Rev Growth (yoy):0.010.06-0.10
Revenue:6.33B22.01B115.57B
Gross Margin:0.590.630.24
EBITDA:954.10M5.24B13.92B
Operating Margin:0.100.190.08
Net Income:505.30M2.73B-13.40B
EPS:1.371.23-6.85
P/E:27.7220.05N/A
PEG (5 yr expected):1.081.00N/A
P/S:2.132.360.41

NetApp is trading at a similar P/S ratio than EMC Corporation.

My analysis

There have been four 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 0.06%. The stock is trading at a P/E ratio of 27.72 and a forward P/E ratio of 12.41. The company has a book value of $13.08 per share and the stock has a dividend yield of 1.58%. 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.

2. Cell Therapeutics (CTIC) engages in the acquisition, development, and commercialization of treatments for cancer.

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Insider selling by insider (last 30 days)

  • Jack Singer sold 10,000 shares on June 5, and currently holds 701,035 shares or 0.6% of the company. Jack Singer is one of CTI's founders and directors and currently serves as the CTI's Executive Vice President, Global Medical Affairs and Translational Medicine.
  • James Bianco sold 53,000 shares on May 8-31, and currently holds 1,732,014 shares or 1.5% of the company. James Bianco is the principal founder of Cell Therapeutics and is the company's President & Chief Executive Officer, and Director.
  • Louis Bianco sold 83,712 shares on May 9-31, and currently holds 553,698 shares or 0.5% of the company. Louis Bianco is a founder of CTI and has been CTI's Executive Vice President, Finance and Administration since February 1, 1992.
  • Fred Telling sold 64,798 shares on May 30, and currently holds 240,308 shares or 0.2% of the company. Fred Telling joined CTI's Board in December 2006.
  • Richard Love sold 23,000 shares on May 24 and currently holds 322,308 shares or 0.3% of the company. Richard Love serves as a director of the company.

Insider selling by calendar month

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

MonthInsider selling / sharesInsider buying / shares
June 201310,0000
May 2013224,5100
April 201300
March 2013346,7120
February 201300
January 201300

There have been 581,222 shares sold and zero shares purchased this year.

Financials

The company reported the first-quarter financial results on May 2, with the following highlights:

Revenue$1.1 million
Net loss$19.4 million
Cash$44.3 million
Debt$8.1 million

Outlook

CTI's financial guidance for 2013 is a loss from operations of approximately $60 to $65 million, excluding non-cash stock-based compensation expense.

Upcoming milestones

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Pipeline

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Competition

Competition in the pharmaceutical and biotechnology industries is intense. Cell Therapeutics faces competition from a variety of companies focused on developing oncology drugs. Cell Therapeutics competes with large pharmaceutical companies and with other specialized biotechnology companies. With respect to Pixuvri, there are no other products approved in the E.U. as monotherapy for the treatment of adult patients with multiply relapsed or refractory aggressive non-Hodgkin lymphoma; however there are other agents approved to treat aggressive non-Hodgkin lymphoma that could be used in this setting including both branded and generic anthracyclines as well as mitoxanthrone. There are also other investigational candidates being tested in aggressive non-Hodgkin lymphoma which if approved could compete with Pixuvri.

With respect to Cell Therapeutics' other investigational candidates if approved they may face competition from compounds that are currently approved or may be in the future. Pacritinib would compete with Incyte (INCY), which markets Jakafi, and potentially other candidates in development that target JAK inhibition to treat cancer. Opaxio would compete with other taxanes, epothilones, and other cytotoxic agents, which inhibit cancer cells by a mechanism similar to taxanes, or similar products. Such corporations include, among others, Bristol-Myers Squibb Co. (BMY) and others, which market paclitaxel and generic forms of paclitaxel; Sanofi-Aventis (SNY), which markets docetaxel; Genentech, Roche (OTCQX:RHHBY) and OSI Pharmaceuticals, which market Tarceva; Genentech and Roche, which market Avastin; Eli Lilly (LLY), which markets Alimta; and Celgene (CELG), which markets Abraxane. Tosedostat would compete with corporations such as Eisai (GM:ESALF), which markets Dacogen; Celgene, which markets Vidaza, Revlimid, and Thalomid; Genzyme, which markets Clolar and new anti-cancer drugs that may be developed and marketed.

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 5.28%. The company has a book value of $0.15 per share. The stock has already reached its bearish $1.5 price target from the Point and Figure chart. I am not recommending a short position in the stock from the current level.

3. Nordstrom (JWN), a fashion specialty retailer, offers apparel, shoes, cosmetics, and accessories for women, men, and children in the United States.

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Insider selling by insider (last 30 days)

  • Daniel Little sold 37,384 shares on June 5-7, pursuant to a 10b5-1 trading plan. Daniel Little currently holds 38,674 shares or less than 0.1% of the company. Daniel Little is Executive Vice President and Chief Administrative Officer.
  • Enrique Hernandez sold 8,007 shares on May 28, and currently holds 13,600 shares or less than 0.1% of the company. Enrique Hernandez serves as a director of the company.
  • David Witman sold 15,660 shares on May 24-28, and currently holds 15,055 shares or less than 0.1% of the company. David Witman is Executive Vice President and General Merchandise Manager, Men's Apparel.
  • Teri Bariquit sold 3,625 shares on May 21, and currently holds 5,508 shares or less than 0.1% of the company. Teri Bariquit is Executive Vice President, Nordstrom Merchandise Group.
  • Michael Richardson sold 27,892 shares on May 21, and currently holds 30,197 shares or less than 0.1% of the company. Michael Richardson is Executive Vice President, Chief Information Officer.
  • Erik Nordstrom sold 46,012 shares on May 13, pursuant to a 10b5-1 trading plan. Erik Nordstrom currently holds 2,150,718 shares or 1.1% of the company. Erik Nordstrom is Executive Vice President and President, Stores.
  • Peter Nordstrom sold 46,012 shares on May 13, pursuant to a 10b5-1 trading plan. Peter Nordstrom currently holds 2,075,147 shares or 1.1% of the company. Peter Nordstrom is Executive Vice President and President, Merchandising.

Insider selling by calendar month

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

MonthInsider selling / sharesInsider buying / shares
June 201337,3840
May 2013191,4940
April 201300
March 201324,9650
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 16, with the following highlights:

Revenue$2.7 billion
Net income$145 million
Cash$1.2 billion
Debt$3.1 billion

Outlook

The company expects annual earnings per diluted share of $3.65 to $3.80. This reflects full-year same-store sales increases of 3 to 5 percent and incorporates the performance of the first quarter. It also includes the impact of share repurchases in the first quarter, which is expected to increase earnings per diluted share by approximately $0.05.

Competition

Here is a table comparing Nordstrom against the apparel stores industry.

CompanyJWNIndustry Average (Apparel Stores)
Market Cap:11.61B21.12B
Employees:61,00012.00K
Qtrly Rev Growth (yoy):0.050.19
Revenue:12.27B9.27B
Gross Margin:0.370.50
EBITDA:1.69B539.00M
Operating Margin:0.11-0.01
Net Income:731.00MN/A
EPS:3.60N/A
P/E:16.5333.13
PEG (5 yr expected):1.372.08
P/S:0.930.86

Nordstrom's P/S ratio is in line with the industry average.

My analysis

There have been seven 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 9.34%. The stock is trading at a P/E ratio of 16.53 and a forward P/E ratio of 14.10. The company has a book value of $9.68 per share and the stock has a dividend yield of 2.02%. 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 Biotech, 1 Tech Stock And 1 Apparel Store With Recent Intensive Insider Selling