In this article, I will feature one consumer goods company that has seen intensive insider selling during the last 30 days. Intensive insider selling can be defined by the following three criteria:
- The stock was sold by three or more insiders within one month.
- The stock was not purchased by any insiders in the month of intensive selling.
- At least two sellers decreased their holdings by more than 10%.
Lululemon Athletica (NASDAQ:LULU) designs, manufactures, and distributes athletic apparel and accessories for women, men, and female youth.
Insider selling during the last 30 days
Here is a table of Lululemon Athletica's insider-trading activity during the last 30 days by insider.
|Name||Title||Trade Date||Shares Sold||Current Ownership (shares+options)||Decrease In Ownership|
|John Currie||CFO||Oct 2||20,000||21,147 shares + 10,000 options||39.1%|
|Christine Day||CEO||Sep 18||41,041||10,416 shares||79.8%|
|Delaney Schweitzer||EVP||Sep 19||36,409||10,134 shares + 6,875 options||68.2%|
There have been 97,450 shares sold by insiders during the last 30 days.
Insider selling by calendar month
Here is a table of Lululemon Athletica's insider-trading activity by calendar month.
|Month||Insider selling / shares||Insider buying / shares|
There have been 2,799,896 shares sold and there have been zero shares purchased by insiders this year.
Lululemon Athletica reported the fiscal 2013 second-quarter, which ended August 4, financial results on September 12, with the following highlights:
|Net income||$56.5 million|
- For the third quarter of fiscal 2013, Lululemon expects net revenue to be in the range of $370 million to $375 million based on a comparable-store sales percentage increase in the mid-single digits on a constant-dollar basis. Diluted earnings per share are expected to be in the range of $0.39 to $0.41 for the quarter.
- For the full fiscal 2013, Lululemon expects net revenue to be in the range of $1.625 billion to $1.635 billion and diluted earnings per share are expected to be in the range of $1.94 to $1.97 for the full year.
Lululemon has the highest P/S ratio among these companies.
Here is a table of these competitors' insider-trading activities this year.
|Company||Insider buying / shares||Insider selling / shares|
Only Lululemon has seen intensive insider selling during the past 30 days.
There have been three different insiders selling Lululemon and there have not been any insiders buying Lululemon during the past 30 days. All three of these insiders decreased their holdings by more than 10%. Lululemon has an insider ownership of 0.20%.
There are 12 analyst buy ratings, 13 neutral ratings, and three sell ratings with an average price target of $73.75. Lululemon is trading at a P/E ratio of 41.32 and a forward P/E ratio of 30.74. The company has a book value of $6.76 per share.
Before entering short Lululemon, I would like to get a bearish confirmation from the Point and Figure chart. The three main reasons for the proposed short entry are high P/S ratio, bearish analyst target prices and the intensive insider selling activity.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.