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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%.

RPX Corporation (RPXC) provides patent risk management solutions in the United States, Japan, and internationally.


(Click to enlarge)

Insider selling during the last 30 days

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

Name Title Trade Date Shares Sold Rule 10b5-1 Current Ownership Decrease In Ownership
John Amster CEO Nov 26-Dec 13 34,400 Yes 1,776,565 shares 1.9%
Martin Roberts SVP Nov 22-Dec 11 8,095 Yes 19,680 shares + 56,574 options 9.6%
Geoffrey Barker Director Nov 20-Dec 10 74,001 Yes 1,002,363 shares 6.9%
Steven Swank SVP Nov 21-Dec 5 7,732 Yes

0 shares + 31,517 options

19.7%
Mallun Yen EVP Dec 2 10,000 Yes 0 shares + 516,000 options 1.9%
Paul Scola SVP Nov 25 2,925 No 0 shares 100%

There have been 137,153 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 RPX's insider-trading activity by calendar month.

Month Insider selling / shares Insider buying / shares
December 2013 67,183 0
November 2013 375,753 0
October 2013 120,994 0
September 2013 131,791 0
August 2013 152,666 10,000
July 2013 149,551 0
June 2013 163,744 0
May 2013 267,948 0
April 2013 124,528 0
March 2013 170,390 0
February 2013 1,231,253 50,000
January 2013 124,400 0

There have been 3,080,201 shares sold and there have been 60,000 shares purchased by insiders this year.

Financials

RPX reported the third-quarter financial results on October 29 with the following highlights:

Revenue $58.6 million
Net income $8.4 million
Cash $277.6 million

Outlook

RPX's guidance is as follows:

Q4/2013 FY2013
Revenue $60.2-$60.6 million $237.4-$237.8 million
Net income (non-GAAP) $9.2-$10.0 million $52.2-$53.0 million

Competition

RPX's competitors include Acacia Research Corporation (ACTG). Here is a table comparing these two companies.

Company RPXC ACTG
Market Cap: 854.28M 637.56M
Employees: 136 55
Qtrly Rev Growth (yoy): 0.25 -0.56
Revenue: 228.79M 181.76M
Gross Margin: 0.56 0.83
EBITDA: 167.59M 25.41M
Operating Margin: 0.31 -0.10
Net Income: 43.84M -11.99M
EPS: 0.82 -0.25
P/E: 19.81 N/A
PEG (5 yr expected): 1.55 2.49
P/S: 3.71 3.50

RPX is trading at a higher P/S ratio than its direct competitor. In Acacia Research, there have been 191,991 shares sold and there have been zero shares purchased by insiders this year. Only RPX has seen intensive insider selling during the last 30 days.

Conclusion

There have been six different insiders selling RPX and there have not been any insiders buying RPX during the last 30 days. Two of these six insiders decreased their holdings by more than 10%. RPX has an insider ownership of 2.10%.

RPX is trading at a P/E ratio of 19.81 and a forward P/E ratio of 15.15. The company has a book value of $7.89 per share. Before entering short RPX, 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.

Source: RPX Corporation: 6 Different Insiders Have Sold Shares During The Last 30 Days