In this article, I will feature one drug 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%.
Rite Aid Corporation (RAD) operates retail drugstores in the United States.
Insider selling during the last 30 days
Here is a table of Rite Aid'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|
|Robert K. Thompson||EVP||Oct 18||250,000||No||157,911 shares + 250,000 options||38.0%|
|Marc Strassler||EVP||Sep 27-Oct 17||375,000||No||699,369 shares||34.9%|
|Douglas Donley||SVP||Oct 17||88,700||No||81,628 shares||52.1%|
|Frank Vitrano||CFO||Oct 11-14||1,982,900||No||1,183,384 shares||62.6%|
|Tony Montini||EVP||Oct 4||414,500||No||643,713 shares + 217,700 options||32.5%|
|Green Equity Investors III LP||Affiliate of director||Sep 27||34,000,000||No||6,000,000||85%|
There have been 37,111,100 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 Rite Aid's insider-trading activity by calendar month.
|Month||Insider selling / shares||Insider buying / shares|
There have been 153,230,292 shares sold and there have been zero shares purchased by insiders this year.
Rite Aid reported the fiscal 2014 second-quarter, which ended August 31, financial results on September 19 with the following highlights:
|Net income||$32.8 million|
Rite Aid's fiscal 2014 full-year guidance is as follows:
|Revenue||$25.1 billion - $25.3 billion|
|Adjusted EBITDA||$1.24 billion - $1.30 billion|
|Net income||$182.0 million - $268.0 million|
|Capital expenditures||$400 million|
Rite Aid has the slowest revenue growth among these four companies.
Here is a table of these competitors' insider-trading activities this year.
|Company||Insider buying / shares||Insider selling / shares|
Only Rite Aid has seen intensive insider selling during the past 30 days.
There have been six different insiders selling Rite Aid and there have not been any insiders buying Rite Aid during the past 30 days. All six of these insiders decreased their holdings by more than 10%. Rite Aid has an insider ownership of 1.10%.
There are four analyst buy ratings, four neutral ratings, and zero sell ratings with an average price target of $5.01. Rite Aid is trading at a P/E ratio of 16.15 and a forward P/E ratio of 15.47. The company has a book value of -$2.78 per share.
Before entering short Rite Aid, I would like to get a bearish confirmation from the Point and Figure chart. The three main reasons for the proposed short entry are negative book value, bearish analyst price targets and the intensive insider selling activity.