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:
- 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%.
Morningstar (NASDAQ:MORN) provides independent investment research to investors worldwide.
Insider selling during the last 30 days
Here is a table of Morningstar's insider-trading activity during the last 30 days.
|Name||Title||Trade Date||Shares Sold||Rule 10b5-1||Current Ownership||Decrease In Ownership|
|Steven Kaplan||Director||Nov 19||2,000||Yes||54,729 shares||3.5%|
|Jack Noonan||Director||Nov 18||1,000||Yes||58,917 shares + 1,000 options||1.6%|
|Richard Robbins||General Counsel||Oct 29-Nov 12||2,000||Yes|
|David Williams||Head of Design and Marketing||Oct 28-Nov 8||27,867||Yes||39,350 shares + 2,133 options||40.2%|
|Bevin Desmond||Head of Global Markets and Human Resources||Oct 28-Nov 11||40,000||Yes||75,598 shares||34.6%|
There have been 72,867 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 Morningstar's insider-trading activity by calendar month.
|Month||Insider selling / shares||Insider buying / shares|
There have been 160,997 shares sold and there have been zero shares purchased by insiders this year. The month of October has seen the most insider selling.
Morningstar reported the third-quarter financial results on October 23 with the following highlights:
|Net income||$31.5 million|
Morningstar has the highest P/S ratio among these three companies.
Here is a table of these competitors' insider-trading activities during the last six months.
|Company||Insider buying / shares||Insider selling / shares|
Only Morningstar has seen intensive insider selling during the last 30 days.
There have been five different insiders selling Morningstar and there have not been any insiders buying Morningstar during the last 30 days. Two of these five insiders decreased their holdings by more than 10%. Morningstar has an insider ownership of 55.20%.
Morningstar is trading at a P/E ratio of 31.63, and a forward P/E ratio of 26.60. The company has a book value of $16.46 per share, and the stock has a dividend yield of 0.59%.
Before entering short Morningstar, 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.