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In this article, I will feature one health services company that has seen intensive insider selling during the last 30 days. 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%.

Cigna Corporation (CI), a health services organization, provides insurance and related products and services in the United States and internationally.

(click to enlarge)

Insider selling during the last 30 days

  • Nicole Jones sold 1,530 shares on September 12 pursuant to a Rule 10b5-1 trading plan. Nicole Jones currently holds 6,650 shares or less than 0.1% of the company. Nicole Jones is Executive Vice President and General Counsel for Cigna. Nicole Jones decreased her holdings by 18.7% in September.
  • Jane Henney sold 571 shares on September 10 pursuant to a Rule 10b5-1 trading plan. Jane Henney currently holds zero shares of the company. Jane Henney has been a Director of Cigna since 2004. Jane Henney decreased her holdings by 100% in September.
  • John Murabito sold 24,333 shares on September 6 and currently holds 122,340 shares or less than 0.1% of the company. John Murabito is Executive Vice President, Human Resources and Services. John Murabito decreased his holdings by 16.8% in September.
  • William Zollars sold 571 shares on September 6 and currently holds zero shares of the company. William Zollars has been a Director of Cigna since 2005. William Zollars decreased his holdings by 100% in September.
  • Isaiah Harris sold 571 shares on September 5 pursuant to a Rule 10b5-1 trading plan. Isaiah Harris currently holds zero shares of the company. Isaiah Harris is Chairman of the Board. Isaiah Harris decreased his holdings by 100% in September.

Insider selling by calendar month

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

MonthInsider selling / sharesInsider buying / shares
September 201327,5760
August 2013100,5140
July 201300
June 2013117,5150
May 201300
April 201300
March 2013152,1114,200
February 201300
January 20136,2500

There have been 403,966 shares sold and there have been 4,200 shares purchased by insiders this year.

Financials

Cigna reported the second-quarter financial results on August 1 with the following highlights:

Revenue$8.0 billion
Adjusted income from operations$512 million
Cash$3.5 billion
Debt$5.2 billion

Outlook

Cigna's outlook for full-year 2013 consolidated adjusted income from operations is in the range of $1.8 billion to $1.9 billion, or $6.25 to $6.65 per share.

Competition

Cigna's competitors include Aetna (AET), UnitedHealth Group (UNH) and WellPoint (WLP). Here is a table comparing these companies.

CompanyCIAETUNHWLP
Market Cap:21.71B23.87B72.53B25.13B
Employees:35,80035,000133,00043,500
Qtrly Rev Growth (yoy):0.080.310.120.16
Revenue:31.11B39.92B116.82B66.37B
EBITDA:3.72B3.82B10.20B5.68B
Operating Margin:0.110.080.080.07
Net Income:1.43B1.72B5.43B2.84B
EPS:4.975.025.259.17
P/E:15.4412.8113.609.16
PEG (5 yr expected):1.070.951.490.89
P/S:0.710.600.630.38

Cigna has the highest P/S and P/E ratios among these four companies.

Here is a table of these competitors' insider-trading activities during the last six months.

CompanyInsider buying / sharesInsider selling / shares
AET073,778
UNH1,000262,731
WLP01,162,817

WellPoint has also seen intensive insider selling during the past 30 days.

Conclusion

There have been five different insiders selling Cigna and there have not been any insiders buying Cigna during the past 30 days. All five of these insiders decreased their holdings by more than 10%. Cigna has an insider ownership of 0.20%.

Cigna is trading at a P/E ratio of 15.44 and a forward P/E ratio of 10.72. The company has a book value of $34.66 per share and the stock has a dividend yield of 0.05%.

Before entering short Cigna, 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: Intensive Insider Selling In Cigna