In this article, I will feature one industrial sector company 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%.
Rockwell Automation (NYSE:ROK) provides industrial automation power, control, and information solutions. It operates in two segments, Architecture & Software and Control Products & Solutions.
Insider selling during the last 30 days
Here is a table of Rockwell Automation's insider-trading activity during the last 30 days.
|Name||Title||Trade Date||Shares Sold||Rule 10b5-1||Current Ownership||Decrease In Ownership|
|William McCormick||Director||Nov 22||1,500||No||12,672 shares||10.6%|
|Keith Nosbusch||CEO||Nov 11-19||222,103||No||487,237 shares + 3,608 options||31.2%|
|John McDermott||SVP||Nov 12-19||50,500||No|
|Frank Kulaszewicz||SVP||Nov 15||4,934||No||16,922 shares + 11,800 options||14.7%|
|Sujeet Chand||SVP||Nov 13||15,950||No||37,874 shares + 14,850 options||23.2%|
|David Dorgan||VP||Nov 12||7,850||No||14,414 shares||35.3%|
|Martin Thomas||SVP||Nov 11||32,350||No||18,917 shares + 1,450 options||61.4%|
|Douglas Hagerman||SVP||Nov 11||55,905||No||41,722 shares||57.3%|
|Susan Schmitt||SVP||Nov 11||3,600||No||14,465 shares||19.9%|
|Steven Etzel||VP||Nov 11||3,300||No||10,595 shares||23.7%|
|Dralle Rohr||VP||Nov 11||2,100||No||19,015 shares||9.9%|
|Theodore Crandall||CFO||Nov 7||34,050||Yes||85,422 shares + 1,450 options||28.2%|
There have been 434,142 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 Rockwell Automation's insider-trading activity by calendar month.
|Month||Insider selling / shares||Insider buying / shares|
There have been 1,472,790 shares sold and there have been zero shares purchased by insiders this year.
Rockwell Automation reported the fiscal 2013 full-year, which ended September 30, financial results on November 7 with the following highlights:
|Net income||$756.3 million|
(Source: Earnings presentation)
Rockwell Automation's fiscal 2014 guidance is as follows:
|Organic sales growth||2% to 6%|
(Source: Earnings presentation)
Rockwell Automation has the highest P/S ratio among these four companies. In Honeywell, there have been 1,901,976 shares sold and there have been 1,000 shares purchased by insiders this year. Honeywell has also seen intensive insider selling during the last 30 days.
There have been 12 different insiders selling Rockwell Automation and there have not been any insiders buying Rockwell Automation during the last 30 days. Eleven of these 12 insiders decreased their holdings by more than 10%. Rockwell Automation has an insider ownership of 0.70%.
Rockwell Automation is trading at a P/E ratio of 21.14 and a forward P/E ratio of 16.62. The company has a book value of $18.65 per share and the stock has a dividend yield of 2.05%.
Before entering short Rockwell Automation, 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.