In this article, I will feature one apparel store 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%.
Ascena Retail Group (ASNA) operates as a specialty retailer of apparel for women, and tween girls and boys.
Insider selling during the last 30 days
Here is a table of Ascena'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|
|Michael Rayden||CEO||Oct 2-11||202,406||No||4,761 shares||97.7%|
|Jay Levine||SVP||Oct 11||40,000||No||5,644 shares + 40,000 options||46.7%|
|Ronald Robinson||President||Oct 2||13,859||No||18,586 shares + 83,750 options||11.9%|
|Gene Wexler||SVP||Sep 26||40,000||No||333 shares + 20,000 options||66.3%|
There have been 296,265 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 Ascena's insider-trading activity by calendar month.
|Month||Insider selling / shares||Insider buying / shares|
There have been 339,531 shares sold and there have been zero shares purchased by insiders this year. The month of October has seen the most insider selling this year.
Ascena reported the fiscal 2013 full-year, which ended July 27, financial results on September 24, with the following highlights:
|Net income||$151.3 million|
Ascena's guidance for adjusted earnings per diluted share from continuing operations for the fiscal year ending July 2014 is in the range of $1.25 to $1.30.
Ascena has the highest P/S ratio among these three companies, which could explain some of the insider selling.
Here is a table of these competitors' insider-trading activities this year.
|Company||Insider buying / shares||Insider selling / shares|
Only Ascena has seen intensive insider selling during the past 30 days.
There have been four different insiders selling Ascena and there have not been any insiders buying Ascena during the past 30 days. All four of these insiders decreased their holdings by more than 10%. Ascena has an insider ownership of 13.80%.
Ascena is trading at a P/E ratio of 21.24 and a forward P/E ratio of 12.71. Ascena has a book value of $9.82 per share.
Before entering short Ascena, 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.