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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:

  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%.

Masonite International Corporation (NYSE:DOOR) manufactures and markets interior and exterior door products worldwide.

(click to enlarge)

Insider selling during the last 30 days

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

NameTitleTrade DateShares SoldRule 10b5-1Current OwnershipDecrease In Ownership
Gail AuerbachSVPDec 9-246,000Yes24,331 shares19.8%
Mark ErcegCFODec 1812,095Yes68,090 shares15.1%
Oaktree Capital10% OwnerDec 17300,497No4,477,837 shares6.3%
Lawrence ReparCOODec 97,500Yes39,344 shares16.0%
Glenwood CoulterEVPDec 22,000Yes109,054 shares1.8%

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.

MonthInsider selling / sharesInsider buying / shares
December 2013328,0920
November 2013114,4170
October 2013103,6350

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.

Financials

Masonite reported the third-quarter financial results on November 6 with the following highlights:

Revenue$433.1 million
Net income$3.6 million
Cash$113.2 million
Debt$378.0 million

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(Source: Earnings presentation)

Outlook

Market indicators remain positive, but choppiness is expected.

(click to enlarge)

(Source: Earnings presentation)

Competition

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.

Conclusion

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.

Source: Masonite: 5 Different Insiders Have Sold Shares This Month