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%.
Covidien (NYSE:COV) develops, manufactures, and sells healthcare products for use in clinical and home settings worldwide.
Insider selling during the last 30 days
Here is a table of Covidien'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 Brown||VP||Dec 27||4,000||Yes||65,868 shares||5.7%|
|Brian King||VP||Dec 16||5,000||Yes||37,028 shares||11.9%|
|Eric Green||VP||Dec 9||4,680||Yes||12,962 shares||26.5%|
|John Masterson||SVP||Dec 4-9||38,484||No||72,207 shares + 36,660 options||26.1%|
|James Clemmer||SVP||Dec 6||43,607||No||37,308 shares + 45,865 options||34.4%|
|Michael Sgrignari||SVP||Dec 5||23,277||No||28,285 shares + 35,499 options||26.7%|
|Bryan Hanson||SVP||Dec 2||36,857||No||42,854 shares + 112,369 options||19.2%|
There have been 155,905 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 Covidien's insider-trading activity by calendar month.
|Month||Insider selling / shares||Insider buying / shares|
There have been 992,402 shares sold, and there have been zero shares purchased by insiders this year.
Covidien reported the fiscal 2013 full-year, which ended September 27, financial results on November 8 with the following highlights:
|Net income||$1.7 billion|
Covidien estimates that net sales in fiscal 2014 will be up 2% to 5%.
|Company||COV||BDX||BCR||JNJ||Industry Average (Medical Instruments & Supplies)|
|Qtrly Rev Growth (yoy):||0.02||0.05||0.04||0.03||0.07|
|PEG (5 yr expected):||1.89||1.99||2.23||2.65||N/A|
Covidien has the slowest revenue growth among these four companies.
Here is a table of these competitors' insider-trading activities during the last 30 days.
|Company||Insider buying / shares||Insider selling / shares|
CR Bard has also seen intensive insider selling during the last 30 days.
There have been seven different insiders selling Covidien, and there have not been any insiders buying Covidien during the last 30 days. Six of these seven insiders decreased their holdings by more than 10%. Covidien has an insider ownership of 0.20%.
Before entering short Covidien, 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.