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%.
Allison Transmission Holdings (NYSE:ALSN) engages in the design and manufacture of commercial and military fully-automatic transmissions and hybrid-propulsion systems for transit buses.
Insider selling during the last 30 days
Here is a table of Allison'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|
|Eric Scroggins||VP||Sep 17-27||55,940||Yes||16,747 shares + 17,858 options||61.8%|
|James Wanaselja||VP||Sep 18-19||23,000||Yes||24,611 shares + 88,189 options||16.9%|
|Sharon Dean||VP||Sep 17||10,000||Yes||11,195 shares + 72,575 options||10.7%|
There have been 88,940 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 Allison's insider-trading activity by calendar month.
|Month||Insider selling / shares||Insider buying / shares|
There have been 13,095,199 shares sold and there have been zero shares purchased by insiders this year.
Allison reported the second-quarter financial results on July 29 with the following highlights:
|Net income||$50.5 million|
Allison's full year 2013 guidance includes adjusted EBITDA excluding technology-related license expenses in the range of $630 to $660 million and adjusted free cash flow in the range of $325 to $375 million. Allison expects to achieve these levels on net sales for full year 2013 in the range of $1,920 to $1,960 million.
Allison's competitors include Caterpillar (NYSE:CAT). Here is a table comparing these two companies.
There have been three different insiders selling Allison and there have not been any insiders buying Allison during the past 30 days. All three of these insiders decreased their holdings by more than 10%. Allison has an insider ownership of 0.20%.
Allison is trading at a P/E ratio of 38.63 and a forward P/E ratio of 21.16. The company has a book value of $7.69 per share and the stock has a dividend yield of 1.93%.
Before entering short Allison, 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.
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.