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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:

  1. The stock was sold by three or more insiders within one month.
  2. The stock was not purchased by any insiders in the month of intensive selling.
  3. At least two sellers decreased their holdings by more than 10%.

IHS Inc. (IHS) provides critical information and insight products and services. It offers its products and services in various areas, including energy and power; design and supply chain; defense, risk, and security; environment, health, and safety, and sustainability; country and industry forecasting; and commodities, pricing, and cost.

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Insider selling during the last 30 days

Here is a table of IHS' insider-trading activity during the last 30 days by insider.

NameTitleTrade DateShares SoldRule 10b5-1Current OwnershipDecrease In Ownership
Brian SweeneySVPOct 2-172,360Yes5,370 shares30.5%
Stephanie BuscemiSVPOct 101,000No5,784 shares14.7%
Stephen GreenEVPOct 12,000Yes31,739 shares5.9%

There have been 5,360 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 IHS' insider-trading activity by calendar month.

MonthInsider selling / sharesInsider buying / shares
October 20135,3600
September 201310,8350
August 20133,0000
July 201319,0100
June 20133,8860
May 201300
April 20133,3670
March 201325,0000

There have been 70,458 shares sold and there have been zero shares purchased by insiders since March 2013.

Financials

IHS reported the third-quarter, which ended August 31, financial results on September 19 with the following highlights:

Revenue$480.3 million
Net income$23.4 million
Cash$271.0 million
Debt$2.3 billion

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Outlook

For the year ending November 30, 2013, IHS expects:

  • Revenue in a range of $1.80 billion to $1.82 billion.
  • Adjusted EBITDA in a range of $540 million to $560 million.
  • Adjusted EPS in a range of $4.75 to $5.00 per diluted share.

Competition

IHS' competitors include Moody's (MCO), Gartner (IT), and Thomson Reuters (TRI). Here is a table comparing these companies.

CompanyIHSMCOITTRI
Market Cap:7.40B15.86B5.64B29.48B
Employees:8,0006,9705,74460,000
Qtrly Rev Growth (yoy):0.250.180.12-0.03
Revenue:1.70B2.93B1.70B13.03B
Gross Margin:0.590.720.590.28
EBITDA:367.00M1.27B284.35M2.98B
Operating Margin:0.130.400.150.15
Net Income:137.43M757.90M173.39M1.08B
EPS:2.053.361.811.31
P/E:53.7421.4133.4227.10
PEG (5 yr expected):1.641.541.739.46
P/S:4.365.413.312.26
IHS has the highest P/E ratio among these four companies.

Here is a table of these competitors' insider-trading activities during the last six months.

CompanyInsider buying / sharesInsider selling / shares
MCO03,867,738
IT0298,084
TRI522,61241,375

Only IHS has seen intensive insider selling during the past 30 days.

Conclusion

There have been three different insiders selling IHS and there have not been any insiders buying IHS during the past 30 days. Two of these three insiders decreased their holdings by more than 10%. IHS has an insider ownership of 0.60%.

IHS is trading at a P/E ratio of 53.74 and a forward P/E ratio of 19.36. The company has a book value of $27.04 per share. Before entering short IHS, I would like to get a bearish confirmation from the Point and Figure chart. The two main reasons for the proposed short entry are high P/E ratio and the intensive insider selling activity.

Source: Insiders Are Selling IHS