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:
- 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%.
Acuity Brands (NYSE:AYI) designs, produces, and distributes lighting solutions, components, and services for commercial, institutional, industrial, infrastructure, and residential applications in North America and internationally.
Insider selling during the last 30 days
Here is a table of Acuity Brands' insider-trading activity during the last 30 days by insider.
|Name||Title||Trade Date||Shares Sold||Rule 10b5-1||Current Ownership||Decrease In Ownership|
|Peter Browning||Director||Jan 16||927||No||1,464 shares||38.8%|
|Julia North||Director||Jan 13||1,815||No||2,626 shares||40.9%|
|Richard Reece||CFO||Jan 13||28,500||No||108,086 shares||20.9%|
|Vernon Nagel||CEO||Jan 13||81,518||No||277,697 shares||22.7%|
There have been 112,760 shares sold by insiders during the last 30 days.
Insider selling by calendar month
Here is a table of Acuity Brands' insider-trading activity by calendar month.
|Month||Insider selling / shares||Insider buying / shares|
There have been 286,355 shares sold, and there have been zero shares purchased by insiders since January 2013.
Acuity Brands reported the fiscal 2014 first-quarter, which ended November 30, financial results on January 9 with the following highlights:
|Net income||$44.5 million|
Third-party forecasts and leading indicators suggest that the growth rate for the North American lighting market, which includes renovation and retrofit activity, will be in the mid-single digit range during 2014.
Acuity Brands' competitors include Eaton Corporation's (NYSE:ETN) Cooper Lighting division, Hubbell Incorporated (NYSE:HUB.B), and Koninklijke Philips N.V. (NYSE:PHG). Here is a table comparing these companies.
|Company||AYI||ETN||HUB.B||PHG||Industry Average (Diversified Electronics)|
|Qtrly Rev Growth (yoy):||0.20||0.42||0.06||-0.04||0.06|
|PEG (5 yr expected):||2.14||1.43||N/A||19.63||1.00|
Acuity Brands has the highest P/S ratio among these four companies.
Here is a table of these competitors' insider-trading activities during the last 12 months.
|Company||Insider buying / shares||Insider selling / shares|
Only Acuity Brands has seen intensive insider selling during the last 30 days.
There have been four different insiders selling Acuity Brands, and there have not been any insiders buying Acuity Brands during the last 30 days. All four of these insiders decreased their holdings by more than 10%. Acuity Brands has an insider ownership of 0.80%.
There are three analyst buy ratings, 11 neutral ratings, and one sell rating with an average price target of $120.33. Before going short Acuity Brands, I would like to get a bearish confirmation from the Point and Figure chart. The three main reasons for the proposed short entry are bearish analyst price targets, relatively high P/S ratio, and the intensive insider-selling activity.