In this article, I will feature one services sector 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%.
WageWorks (NYSE:WAGE) provides tax-advantaged programs for consumer-directed health, commuter, and other employee spending account benefits (CDBs) in the United States.
Insider selling during the last 30 days
Here is a table of WageWorks' insider-trading activity during the last 30 days.
|Name||Title||Trade Date||Shares Sold||Rule 10b5-1||Current Ownership||Decrease In Ownership|
|Vantagepoint Venture Associates IV LLC||10% Owner||Nov 15-21||386,815||No||3,427,188 shares||10.1%|
|John Larson||Director||Nov 15||13,000||No||49,139 shares||20.9%|
|Richard Berkeley||Director||Nov 13-15||37,500||No|
|Kimberly Jackson||SVP||Nov 13||21,000||No||2,084 shares + 22,500 options||46.1%|
There have been 458,315 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 WageWorks' insider-trading activity by calendar month.
|Month||Insider selling / shares||Insider buying / shares|
There have been 10,855,038 shares sold and there have been 41,500 shares purchased by insiders this year.
WageWorks reported the third-quarter financial results on November 5 with the following highlights:
|Net income||$7.8 million|
WageWorks' guidance is as follows:
|Revenue||$52.7-$54.2 million||$216.9-$218.4 million|
|GAAP net income||$1.7-$3.2 million||$18.1-$19.6 million|
|Non-GAAP net income||$4.7-$6.0 million||$24.8-$26.1 million|
|Non-GAAP adjusted EBITDA||$11.5-$13 million||$54.5-$56 million|
WageWorks has the highest P/S ratio among these four companies.
Here is a table of these competitors' insider-trading activities this year.
|Company||Insider buying / shares||Insider selling / shares|
Aetna has also seen intensive insider selling during the last 30 days.
There have been four different insiders selling WageWorks and there have not been any insiders buying WageWorks during the last 30 days. All four of these insiders decreased their holdings by more than 10%. WageWorks has an insider ownership of 0.20%.
WageWorks is trading at a P/E ratio of 95.00, and a forward P/E ratio of 65.17. The company has a book value of $6.24 per share.
Before entering short WageWorks, 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.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.