In this article, I will feature one industrial 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%.
Masonite International Corporation (DOOR) manufactures and markets interior and exterior door products worldwide.
Insider selling during the last 30 days
Here is a table of Masonite'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|
|Gail Auerbach||SVP||Dec 9-24||6,000||Yes||24,331 shares||19.8%|
|Mark Erceg||CFO||Dec 18||12,095||Yes||68,090 shares||15.1%|
|Oaktree Capital||10% Owner||Dec 17||300,497||No||4,477,837 shares||6.3%|
|Lawrence Repar||COO||Dec 9||7,500||Yes||39,344 shares||16.0%|
|Glenwood Coulter||EVP||Dec 2||2,000||Yes||109,054 shares||1.8%|
There have been 328,092 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 Masonite's insider-trading activity by calendar month.
|Month||Insider selling / shares||Insider buying / shares|
There have been 546,144 shares sold, and there have been zero shares purchased by insiders since October 2013. The month of December has seen the most insider selling.
Masonite reported the third-quarter financial results on November 6 with the following highlights:
|Net income||$3.6 million|
(Source: Earnings presentation)
Market indicators remain positive, but choppiness is expected.
(Source: Earnings presentation)
The North American door industry is highly competitive and includes a number of global and local participants. In the U.S. residential interior door market, the primary participants are Masonite and JELD-WEN which are the only vertically integrated manufacturers of door facings. There are also a number of smaller competitors in the residential interior door market that primarily source door facings from third party suppliers. In the U.S. residential exterior door market, the primary participants are Masonite, JELD-WEN, Plastpro, and Therma-Tru. In the U.S. non-residential building construction door market, the primary participants are Masonite, VT Industries, Graham Wood Doors and Eggers Industries. Competition in these markets is primarily based on product quality, design characteristics, brand awareness, service ability, distribution capabilities, and value.
There have been five different insiders selling Masonite, and there have not been any insiders buying Masonite during the last 30 days. Three of these five insiders decreased their holdings by more than 10%. Masonite has an insider ownership of 2.10%.
Masonite is trading at a forward P/E ratio of 81.16, and the company has a book value of $28.41 per share. Before entering short Masonite, I would like to get a bearish confirmation from the Point and Figure chart. The two main reasons for the proposed short entry are high P/E ratio, and the intensive insider-selling activity.