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%.
Pegasystems (NASDAQ:PEGA) develops, markets, licenses, and supports software to automate business processes primarily in the United States, the United Kingdom, and rest of Europe.
Insider selling during the last 30 days
Here is a table of Pegasystems' insider-trading activity during the last 30 days by insider.
|Name||Title||Trade Date||Shares Sold||Rule 10b5-1||Current Ownership||Decrease In Ownership|
|William Wyman||Director||Nov 26-27||2,500||No||5,147 shares||32.7%|
|Leon Trefler||SVP||Nov 26||513||No||2,869 shares + 1,940 options||9.6%|
|Efstathios Kouninis||VP||Nov 14-15||1,090||No||0 shares||100%|
|Steven Kaplan||Director||Nov 14||8,086||No|
28,083 shares + 10,000 options
There have been 12,189 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 Pegasystems' insider-trading activity by calendar month.
|Month||Insider selling / shares||Insider buying / shares|
There have been 91,071 shares sold and there have been zero shares purchased by insiders this year.
Pegasystems reported the third-quarter financial results on November 12 with the following highlights:
|Net income||$8.7 million|
Pegasystems' license backlog totaled $268 million as of the end of the quarter, up $42 million or 19% from Q3 of last year.
(Source: Investor presentation)
Pegasystems has the second-lowest P/S ratio among these three companies.
Here is a table of these competitors' insider-trading activities this year.
|Company||Insider buying / shares||Insider selling / shares|
Guidewire has also seen intensive insider selling during the last 30 days.
There have been four different insiders selling Pegasystems and there have not been any insiders buying Pegasystems during the last 30 days. Three of these four insiders decreased their holdings by more than 10%. Pegasystems has an insider ownership of 54.31%.
There is one analyst buy rating, three neutral ratings, and zero sell ratings with an average price target of $47.50. Pegasystems is trading at a P/E ratio of 46.52 and a forward P/E ratio of 33.95. The company has a book value of $6.72 per share and the stock has a dividend yield of 0.24%.
Before entering short Pegasystems, I would like to get a bearish confirmation from the Point and Figure chart. The two main reasons for the proposed short entry are bearish analyst price targets, and the intensive insider-selling activity.