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In this article, I will feature one specialty chemicals company 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%.

Cabot (CBT) operates as a specialty chemicals and performance materials company.

(click to enlarge)

Insider selling during the last 30 days

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

NameTitleTrade DateShares SoldRule 10b5-1Current OwnershipDecrease In Ownership
Brian BerubeSVPDec 410,445No39,190 shares + 5,080 options19.1%
Eduardo CordeiroCFODec 348,753No57,373 shares45.9%
Sean KeohaneSVPDec 525,000No43,527 shares36.5%
David MillerEVPNov 143,494Yes

38,391 shares

8.3%
James KellyVPNov 112,500Yes40,109 shares5.9%

There have been 90,192 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 Cabot's insider-trading activity by calendar month.

MonthInsider selling / sharesInsider buying / shares
December 201384,1980
November 201313,4940
October 201300
September 201360,0000
August 201300
July 201300
June 201300
May 201300
April 201300
March 201300
February 201300
January 201320,7820

There have been 178,474 shares sold and there have been zero shares purchased by insiders this year. The month of December has seen the most insider selling.

Financials

Cabot reported the fiscal 2013 full-year, which ended September 30, financial results on October 29 with the following highlights:

Revenue$3.5 billion
Net income$155 million
Cash$95 million
Debt$1.3 billion

(click to enlarge)

(Source: Earnings presentation)

Outlook

Cabot is cautiously optimistic about fiscal 2014 after seeing signs of demand improvement in most of its global businesses.

(click to enlarge)

(Source: Earnings presentation)

Competition

Cabot's competitors include Aditya Birla Nuvo Limited (OTC:ADYBY), Evonik Degussa GmbH (OTC:EVKIF), and Sid Richardson Carbon & Energy Co. (privately held).

Conclusion

There have been five different insiders selling Cabot and there have not been any insiders buying Cabot during the last 30 days. Three of these five insiders decreased their holdings by more than 10%. Cabot has an insider ownership of 0.80%.

Cabot is trading at a P/E ratio of 20.86 and a forward P/E ratio of 11.42. The company has a book value of $30.15 per share and the stock has a dividend yield of 1.62%.

Before entering short Cabot, I would like to get a bearish confirmation from the Point and Figure chart. The main reason for the proposed short entry is the intensive insider-selling activity.

Source: Cabot: 5 Different Insiders Have Sold Shares During The Last 30 Days