In this article, I will feature one financial sector 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%.
Financial Engines (FNGN) provides independent, technology-enabled portfolio management services, investment advice, and retirement income services to participants in employer-sponsored defined contribution plans.
Insider selling during the last 30 days
Here is a table of Financial Engines' insider-trading activity during the last 30 days by insider.
|Name||Title||Trade Date||Shares Sold||Rule 10b5-1||Current Ownership||Decrease In Ownership|
|Christopher Jones||EVP||Sep 23-Oct 16||32,500||Yes||61,562 shares + 70,186 options||19.8%|
|Raymond Sims||CFO||Oct 3-16||10,000||Yes||7,127 shares + 7,485 options||40.6%|
|Anne Tuttle||EVP||Oct 15||3,800||Yes||6,278 shares||37.7%|
|Jeffrey Maggioncalda||CEO||Sep 26-Oct 10||30,000||Yes||280,655 shares + 42,954 options||8.5%|
|Mary Lee Sharp||EVP||Oct 8||729|
|0 shares + 21,688 options||3.3%|
|Garry Hallee||EVP||Sep 24-Oct 8||19,640||Yes||124,990 shares||13.6%|
|Lawrence Raffone||President||Oct 3||7,500||Yes||35,615||17.4%|
There have been 104,169 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 Financial Engines' insider-trading activity by calendar month.
|Month||Insider selling / shares||Insider buying / shares|
There have been 1,371,569 shares sold and there have been zero shares purchased by insiders this year.
Financial Engines reported the second-quarter financial results on August 1 with the following highlights:
|Net income||$6.3 million|
Financial Engines estimates that its 2013 revenue will be in the range of $233 million to $238 million, and its 2013 non-GAAP adjusted EBITDA will be in the range of $75 million to $77 million.
Financial Engines' competitors include Ameriprise Financial (AMP). Here is a table comparing these two companies.
Financial Engines has higher P/S ratio than its direct competitor. Ameriprise Financial has seen 1,151,465 shares sold and zero shares purchased by insiders this year. Only Financial Engines has seen intensive insider selling during the past 30 days.
There have been seven different insiders selling Financial Engines and there have not been any insiders buying Financial Engines during the past 30 days. Five of these seven insiders decreased their holdings by more than 10%. Financial Engines has an insider ownership of 0.30%.
There are four analyst buy ratings, one neutral rating and zero sell ratings with an average price target of $52.50. The stock is trading at a P/E ratio of 122.24 and a forward P/E ratio of 64.51. The company has a book value of $5.93 per share and the stock has a dividend yield of 0.35%.
Before entering short Financial Engines, I would like to get a bearish confirmation from the Point and Figure chart. The three main reasons for the proposed short entry are bearish analyst price targets, high P/S ratio and the intensive insider selling activity.