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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:

  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%.

WageWorks (NYSE:WAGE) provides tax-advantaged programs for consumer-directed health, commuter, and other employee spending account benefits (CDBs) in the United States.

(click to enlarge)

Insider selling during the last 30 days

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

NameTitleTrade DateShares SoldRule 10b5-1Current OwnershipDecrease In Ownership
Vantagepoint Venture Associates IV LLC10% OwnerNov 15-21386,815No3,427,188 shares10.1%
John LarsonDirectorNov 1513,000No49,139 shares20.9%
Richard BerkeleyDirectorNov 13-1537,500No


Kimberly JacksonSVPNov 1321,000No2,084 shares + 22,500 options46.1%

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.

MonthInsider selling / sharesInsider buying / shares
November 2013458,3150
October 201300
September 201310,00037,500
August 20133,435,5000
July 201340,1560
June 2013935,2850
May 201300
April 201300
March 20135,975,7824,000
February 201300
January 201300

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:

Revenue$53.6 million
Net income$7.8 million
Cash$309.1 million
Debt$29.4 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' competitors include Aetna (NYSE:AET), Automatic Data Processing (NASDAQ:ADP), and Aon Corporation (NYSE:AON). Here is a table comparing these companies.

CompanyWAGEAETADPAONIndustry Average (Management Services)
Market Cap:1.94B24.91B38.52B24.85B118.35M
Qtrly Rev Growth (yoy):0.260.460.080.021.23
Gross Margin:0.640.250.490.410.39
Operating Margin:
Net Income:19.12M1.73B1.39B1.06BN/A
PEG (5 yr expected):4.841.132.661.581.82

WageWorks has the highest P/S ratio among these four companies.

Here is a table of these competitors' insider-trading activities this year.

CompanyInsider buying / sharesInsider 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.