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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:

  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%.

WellPoint (NYSE:WLP) offers network-based managed care plans to large and small employer, individual, Medicaid, and senior markets in the United States.

(click to enlarge)

Insider selling during the last 30 days

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

NameTitleTrade DateShares SoldRule 10b5-1Current OwnershipDecrease In Ownership
Richard ZoreticEVPDec 16-2620,889Yes24,432 shares46.1%
John CannonEVPDec 139,558No99,331 shares8.8%
Gloria McCarthyEVPDec 10-11111,867No57,259 shares66.1%

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.

MonthInsider selling / sharesInsider buying / shares
December 2013142,3140
November 201300
October 201300
September 2013562,6340
August 2013234,8850
July 201300
June 2013107,7590
May 2013253,6190
April 20133,9200
March 201310,9000
February 201317,5420
January 201300

There have been 1,333,573 shares sold, and there have been zero shares purchased by insiders this year.

Financials

WellPoint reported the third-quarter financial results on October 23 with the following highlights:

Revenue$18.0 billion
Net income$656.2 million
Cash$21.2 billion
Debt$15.7 billion

Outlook

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

(click to enlarge)

(Source: November presentation)

Competition

WellPoint's competitors include Cigna (NYSE:CI), and Aetna (NYSE:AET). Here is a table comparing these companies.

CompanyWLPCIAET
Market Cap:27.23B23.92B25.12B
Employees:43,50035,80035,000
Qtrly Rev Growth (yoy):0.170.100.46
Revenue:68.99B31.85B44.04B
EBITDA:5.50B3.73B3.92B
Operating Margin:0.070.110.08
Net Income:2.81B1.52B1.73B
EPS:9.205.304.95
P/E:10.0216.3213.82
PEG (5 yr expected):N/A1.151.07
P/S:0.390.750.57
Short Float:2.32%1.30%1.46%

WellPoint has the highest short float among these three companies.

Here is a table of these competitors' insider-trading activities this year.

CompanyInsider buying / sharesInsider selling / shares
CI4,200411,961
AET

4,035

222,034

Cigna has also seen intensive insider selling during the last 30 days.

Conclusion

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.

Source: WellPoint: 3 Different Insiders Have Sold Shares This Month