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In this article, I will feature one tech 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%.

RealPage (NASDAQ:RP) provides on demand software solutions for the rental housing industry in North America.

(click to enlarge)

Insider selling during the last 30 days

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

NameTitleTrade DateShares SoldRule 10b5-1Current OwnershipDecrease In Ownership
Stephen WinnCEODec 4-2380,000Yes26,088,388 shares0.3%
William ChaneyEVPDec 12-137,000No53,659 shares11.5%
Timothy BarkerCFODec 12-1349,550No190,212 shares + 25,450 options18.7%

There have been 136,550 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 RealPage's insider-trading activity by calendar month.

MonthInsider selling / sharesInsider buying / shares
December 2013136,5500
November 2013183,9500
October 201368,5000
September 2013114,6500
August 20131,392,2950
July 201300
June 201323,0000
May 20131,292,6270
April 20133,4000
March 20131,574,0600
February 201324,4860
January 201312,0110

There have been 4,825,529 shares sold, and there have been zero shares purchased by insiders this year.

Financials

RealPage reported the third-quarter financial results on November 7 with the following highlights:

GAAP revenue$98.1 million
GAAP net income$12.9 million
Cash$44.0 million

Outlook

RealPage's guidance is as follows:

Q4/2013FY2013
Non-GAAP revenue$102.7-$104.2 million$386.0-$387.5 million
Non-GAAP net income$12.5-$13.1 million$45.0-$45.6 million

Competition

RealPage's competitors include Reed Elsevier (NYSE:RUK), and CoreLogic (NYSE:CLGX). Here is a table comparing these companies.

CompanyRPRUKCLGX
Market Cap:1.76B17.43B3.38B
Employees:3,320N/A4,800
Qtrly Rev Growth (yoy):0.180.06-0.01
Revenue:367.23M5.26B1.64B
Gross Margin:0.610.650.46
EBITDA:56.92MN/A370.40M
Operating Margin:0.070.220.15
Net Income:22.24M850.29M146.07M
EPS:0.292.821.38
P/E:78.0721.0326.03
PEG (5 yr expected):N/A3.09N/A
P/S:4.793.332.02

RealPage has the highest P/S ratio among these three companies. In CoreLogic, there have been 104,359 shares sold, and there have been 2,500 shares purchased by insiders this year. Only RealPage has seen intensive insider selling during the last 30 days.

Conclusion

There have been three different insiders selling RealPage, and there have not been any insiders buying RealPage during the last 30 days. Two of these three insiders decreased their holdings by more than 10%. RealPage has an insider ownership of 32.50%.

Before entering short RealPage, I would like to get a bearish confirmation from the Point and Figure chart. The three main reasons for the proposed short entry are relatively high P/S ratio, high P/E ratio, and the intensive insider-selling activity.

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