In this article, I will feature one tech stock 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%.
Cognizant Technology Solutions (CTSH) provides information technology, consulting, and business process outsourcing services worldwide.
Insider selling during the last 30 days
Here is a table of Cognizant's insider-trading activity during the last 30 days by insider.
|Name||Title||Trade Date||Shares Sold||Rule 10b5-1||Current Ownership (shares+options)||Decrease In Ownership|
|Chandra Sekaran||Officer||Sep 13-Oct 1||63,000||Yes and No||135,291 shares + 25,000 options||28.2%|
|Steven Schwartz||SVP||Sep 17-24||31,995||Yes||0 shares||100%|
|Karen McLoughlin||CFO||Sep 11-18||1,723||Yes||8,773 shares||16.4%|
|Gordon Coburn||President||Sep 11||20,000||Yes||50,330 shares||28.4%|
|Francisco D'Souza||CEO||Sep 11||24,700||Yes||230,934 shares||9.7%|
There have been 141,418 shares sold by insiders during the last 30 days. Chandra Sekaran sold 38,000 shares without the Rule 10b5-1 trading plan and he sold 25,000 shares pursuant to the Rule 10b5-1 trading plan. More details about the Rule 10b5-1 trading plan can be found from this link.
Insider selling by calendar month
Here is a table of Cognizant's insider-trading activity by calendar month.
|Month||Insider selling / shares||Insider buying / shares|
There have been 276,631 shares sold and there have been 7,500 shares purchased by insiders this year. The month of September has seen the most insider selling this year.
Cognizant reported the second-quarter financial results on August 6, with the following highlights:
|Net income||$300.4 million|
Cognizant provided the following guidance on August 6:
- Third-quarter 2013 revenue anticipated to be at least $2.25 billion.
- Third-quarter 2013 diluted EPS expected to be $1.00 on a GAAP basis and $1.09 on a non-GAAP basis.
- Fiscal 2013 revenue expected to be at least $8.74 billion, up at least 19% compared to 2012.
- Fiscal 2013 diluted EPS expected to be at least $3.96 on a GAAP basis, and $4.32 on a non-GAAP basis.
Cognizant has the lowest P/S ratio among these three companies.
There have been five different insiders selling Cognizant and there have not been any insiders buying Cognizant during the past 30 days. Four of these five insiders decreased their holdings by more than 10%. Cognizant has an insider ownership of 0.20%.
Cognizant is trading at a P/E ratio of 21.85 and a forward P/E ratio of 17.51. The company has a book value of $17.65 per share.
Before entering short Cognizant, 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.