In this article, I will feature one healthcare 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%.
WellPoint (WLP) offers network-based managed care plans to large and small employer, individual, Medicaid, and senior markets in the United States.
Insider selling during the last 30 days
Here is a table of WellPoint'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|
|Richard Zoretic||EVP||Dec 16-26||20,889||Yes||24,432 shares||46.1%|
|John Cannon||EVP||Dec 13||9,558||No||99,331 shares||8.8%|
|Gloria McCarthy||EVP||Dec 10-11||111,867||No||57,259 shares||66.1%|
There have been 142,314 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 WellPoint's insider-trading activity by calendar month.
|Month||Insider selling / shares||Insider buying / shares|
There have been 1,333,573 shares sold, and there have been zero shares purchased by insiders this year.
WellPoint reported the third-quarter financial results on October 23 with the following highlights:
|Net income||$656.2 million|
WellPoint's 2013 guidance is as follows:
|Net income||$8.45 per share|
|Adjusted net income||$8.40 per share|
|Operating cash flow||$3.0 billion|
(Source: November presentation)
|Qtrly Rev Growth (yoy):||0.17||0.10||0.46|
|PEG (5 yr expected):||N/A||1.15||1.07|
WellPoint has the highest short float among these three companies.
Here is a table of these competitors' insider-trading activities this year.
|Company||Insider buying / shares||Insider selling / shares|
Cigna has also seen intensive insider selling during the last 30 days.
There have been three different insiders selling WellPoint, and there have not been any insiders buying WellPoint during the last 30 days. Two of these three insiders decreased their holdings by more than 10%. WellPoint has an insider ownership of 0.20%.
Before entering short WellPoint, 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.