In this article, I will feature one business services 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%.
The Advisory Board Company (ABCO) provides best practices research and analysis, business intelligence and software tools, and management and advisory services to the health care and education industries in the United States and internationally.
Insider selling during the last 30 days
Here is a table of Advisory Board's insider-trading activity during the last 30 days by insider.
|Name||Title||Trade Date||Shares Sold||Rule 10b5-1||Current Ownership||Decrease In Ownership|
|Cormac Miller||EVP||Sep 23 - Oct 9||7,200||Yes||1,207 shares + 16,000 options||29.5%|
|David Felsenthal||President||Sep 23 - Oct 10||12,874||Yes||33,482 shares + 32,185 options||16.4%|
|Robert Musslewhite||CEO||Sep 20||23,205||Yes||33,692 shares + 86,409 options||16.2%|
|Mary Van Hoose||CTO||Sep 16||10,375||Yes||27,140 shares + 22,125 options||17.4%|
|Michael Kirshbaum||CFO||Sep 16||3,000||Yes||20,523 shares + 9,000 options||9.2%|
There have been 56,654 shares sold by insiders during the last 30 days. 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 Advisory Board's insider-trading activity by calendar month.
|Month||Insider selling / shares||Insider buying / shares|
There have been 610,245 shares sold and there have been zero shares purchased by insiders this year.
Advisory Board reported the fiscal 2014 first-quarter, which ended June 30, financial results on July 31 with the following highlights:
|Net income||$3.7 million|
On July 31, Advisory Board updated its revenue guidance for calendar year 2013 to a range of approximately $500 million to $505 million, from a previous range of $495 million to $505 million. Advisory Board also updated its guidance for calendar year 2013 adjusted EBITDA and non-GAAP earnings per diluted share to reflect the impact of the recent acquisition. The company expects calendar year 2013 adjusted EBITDA to be in a range of approximately $87.5 million to $92.5 million, from a previous range of $90 million to $95 million, and non-GAAP earnings per diluted share to be in a range of approximately $1.15 to $1.25, from a previous range of $1.18 to $1.28.
Advisory Board has the highest P/S ratio among these four companies.
Here is a table of these competitors' insider-trading activities this year.
|Company||Insider buying / shares||Insider selling / shares|
Only Advisory Board has seen intensive insider selling during the past 30 days.
There have been five different insiders selling Advisory Board and there have not been any insiders buying Advisory Board during the past 30 days. Four of these five insiders decreased their holdings by more than 10%. Advisory Board has an insider ownership of 0.60%.
There are seven analyst buy ratings, four neutral ratings, and zero sell ratings with an average price target of $63.90. Advisory Board is trading at a P/E ratio of 108.93 and a forward P/E ratio of 41.99. The company has a book value of $8.19 per share.
Before entering short Advisory Board, I would like to get a bearish confirmation from the Point and Figure chart. The four main reasons for the proposed short entry are bearish analyst price targets, high P/S ratio, high P/E ratio and the intensive insider selling activity.