In this article, I will feature one online retailer 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%.
Amazon.com (AMZN) operates as an online retailer in North America and internationally.
Insider selling during the last 30 days
Here is a table of Amazon'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|
|Diego Piacentini||SVP||Nov 15||6,779||Yes||187,555 shares||3.5%|
|Jeffrey Blackburn||SVP||Nov 1-15||16,041||Yes||121,488 shares||11.7%|
|Thomas Szkutak||CFO||Nov 1-15||13,404||Yes|
|David Zapolsky||VP||Nov 15||2,228||Yes||13,861 shares||13.8%|
|Jeffrey Wilke||SVP||Nov 1-7||17,046||Yes||70,112 shares||19.6%|
|Jeffrey Bezos||CEO||Nov 1-5||1,000,000||Yes||84,970,020 shares||1.2%|
|Tom Alberg||Director||Nov 1||4,103||Yes||25,908 shares||13.7%|
|Brian Valentine||SVP||Nov 1||8,309||Yes||60,524 shares||12.1%|
There have been 1,067,910 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 Amazon's insider-trading activity by calendar month.
|Month||Insider selling / shares||Insider buying / shares|
There have been 2,423,146 shares sold and there have been zero shares purchased by insiders this year. The month of November has seen the most insider selling.
Amazon reported the third-quarter financial results on October 24 with the following highlights:
|Net loss||$41 million|
(Source: Earnings presentation)
Amazon's fourth quarter guidance is as follows:
- Net sales are expected to be between $23.5 billion and $26.5 billion, or to grow between 10% and 25% compared with fourth quarter 2012.
- Operating income (loss) is expected to be between $(500) million and $500 million, compared to $405 million in fourth quarter 2012.
Amazon has the second-highest P/S ratio among these three companies.
Here is a table of these competitors' insider-trading activities this year.
|Company||Insider buying / shares||Insider selling / shares|
Apple has also seen intensive insider selling during the last 30 days.
There have been eight different insiders selling Amazon and there have not been any insiders buying Amazon during the last 30 days. Six of these eight insiders decreased their holdings by more than 10%. Amazon has an insider ownership of 18.70%.
Amazon is trading at a P/E ratio of 1,337.57 and a forward P/E ratio of 138.21. Amazon has a book value of $19.88 per share.
Before entering short Amazon, 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.