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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%.

Morningstar (NASDAQ:MORN) provides independent investment research to investors worldwide.

(click to enlarge)

Insider selling during the last 30 days

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

NameTitleTrade DateShares SoldRule 10b5-1Current OwnershipDecrease In Ownership
Steven KaplanDirectorNov 192,000Yes54,729 shares3.5%
Jack NoonanDirectorNov 181,000Yes58,917 shares + 1,000 options1.6%
Richard RobbinsGeneral CounselOct 29-Nov 122,000Yes

26,184 shares

7.1%
David WilliamsHead of Design and MarketingOct 28-Nov 827,867Yes39,350 shares + 2,133 options40.2%
Bevin DesmondHead of Global Markets and Human ResourcesOct 28-Nov 1140,000Yes75,598 shares34.6%

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.

MonthInsider selling / sharesInsider buying / shares
November 201333,2860
October 201340,5810
September 20133,0000
August 20131,0000
July 20133,8800
June 201311,0000
May 201312,0000
April 20132,0000
March 201310,0000
February 201323,0000
January 201321,2500

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.

Financials

Morningstar reported the third-quarter financial results on October 23 with the following highlights:

Revenue$173.5 million
Net income$31.5 million
Cash$342.9 million

Competition

Morningstar's competitors include Standard & Poor's, a division of The McGraw-Hill Companies (NYSE:MHFI), and Thomson Reuters (NYSE:TRI). Here is a table comparing these companies.

CompanyMORNMHFITRI
Market Cap:3.89B19.85B31.47B
Employees:3,49016,68760,000
Qtrly Rev Growth (yoy):0.080.07-0.03
Revenue:688.38M4.85B12.93B
Gross Margin:0.700.680.27
EBITDA:213.36M1.75B2.88B
Operating Margin:0.240.330.14
Net Income:120.06M828.00M909.00M
EPS:2.683.501.11
P/E:31.6320.9634.31
PEG (5 yr expected):2.031.229.41
P/S:5.664.092.43

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.

CompanyInsider buying / sharesInsider selling / shares
MHFI2,50048,670
TRI557,11542,531

Only Morningstar has seen intensive insider selling during the last 30 days.

Conclusion

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.

Source: Morningstar: 5 Different Insiders Have Sold Shares This Month