MSC Industrial: 6 Different Insiders Have Sold Shares This Year

| About: MSC Industrial (MSM)

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%.

MSC Industrial Direct Co. (NYSE:MSM) markets and distributes metalworking, and maintenance, repair, and operations supplies primarily in the United States.

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Insider selling during the last 30 days

Here is a table of MSC Industrial'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
Mitchell Jacobson Director Jan 9-16 155,004 No 6,430,993 shares 2.4%
David Sandler Executive Vice Chairman Jan 9-15 35,490 No 215,065 shares 14.2%
Erik Gershwind CEO Jan 9-14 50,000 No 1,497,470 shares 3.2%
Charles Bonomo SVP Jan 10 4,591 No 9,405 shares 32.8%
Cristopher Davanzo VP Jan 9-10 3,155 No 7,538 shares 29.5%
Thomas Cox EVP Jan 9 1,133 No 16,306 shares 6.5%
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There have been 249,373 shares sold by insiders during the last 30 days.

Insider selling by calendar month

Here is a table of MSC Industrial's insider-trading activity by calendar month.

Month Insider selling / shares Insider buying / shares
January 2014 249,373 0
December 2013 0 0
November 2013 15,000 0
October 2013 0 0
September 2013 0 0
August 2013 57,846 0
July 2013 4,310 0
June 2013 0 0
May 2013 348,180 0
April 2013 191,266 0
March 2013 0 0
February 2013 0 0
January 2013 20,877 0
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There have been 886,852 shares sold, and there have been zero shares purchased by insiders since January 2013.

Financials

MSC Industrial reported the fiscal 2014 first-quarter, which ended November 30, financial results on January 8 with the following highlights:

Revenue $678.5 million
Net income $59.0 million
Cash $48.4 million
Debt $322.0 million
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(Source: Earnings presentation)

Outlook

MSC Industrial's fiscal 2014 second-quarter guidance is as follows:

Revenue $660-$672 million
EPS $0.83-$0.87
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(Source: Earnings presentation)

Competition

MSC Industrial's competitors include Applied Industrial Technologies (NYSE:AIT), and W.W. Grainger (NYSE:GWW). Here is a table comparing these companies.

Company MSM AIT GWW
Market Cap: 5.49B 2.03B 18.33B
Employees: 4,864 5,124 21,100
Qtrly Rev Growth (yoy): 0.04 0.03 0.06
Revenue: 2.42B 2.44B 9.17B
Gross Margin: 0.45 0.28 0.44
EBITDA: 457.54M 202.95M 1.39B
Operating Margin: 0.17 0.07 0.13
Net Income: 248.61M 117.92M 728.81M
EPS: 3.96 2.77 10.29
P/E: 22.33 17.34 25.66
PEG (5 yr expected): 1.89 1.63 1.57
P/S: 2.15 0.84 1.99
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MSC Industrial has the highest P/S ratio among these three companies.

Here is a table of these competitors' insider-trading activities during the last 12 months.

Company Insider buying / shares Insider selling / shares
AIT 0 77,894
GWW

0

115,196
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Only MSC Industrial has seen intensive insider selling during the last 30 days.

Conclusion

There have been six different insiders selling MSC Industrial, and there have not been any insiders buying MSC Industrial during the last 30 days. Three of these six insiders decreased their holdings by more than 10%. MSC Industrial has an insider ownership of 0.90%.

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

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.