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In this article, I will feature one agricultural 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%.

Monsanto Company (MON) provides agricultural products for farmers worldwide.

(click to enlarge)

Insider selling during the last 30 days

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

NameTitleTrade DateShares SoldRule 10b5-1Current OwnershipDecrease In Ownership
Hugh GrantCEOJan 1744,179No475,507 shares8.5%
Robert FraleyCTOJan 1664,850No118,039 shares + 24,740 options31.2%
Steven MizellEVPJan 1424,000No37,189 shares + 23,267 options28.4%
Tom HartleyVPJan 1410,000Yes15,515 shares + 7,900 options29.9%

There have been 143,029 shares sold by insiders during the last 30 days. Tom Hartley sold shares pursuant to a Rule 10b5-1 plan. 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 Monsanto's insider-trading activity by calendar month.

MonthInsider selling / sharesInsider buying / shares
January 2014143,0290
December 201300
November 201313,5600
October 201320,7300
September 20135,2760
August 201300
July 2013106,0730
June 201300
May 2013112,0860
April 2013411,8990
March 201300
February 201300
January 2013139,6370

There have been 952,290 shares sold, and there have been zero shares purchased by insiders since January 2013.

Financials

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

Revenue$3.1 billion
Net income$368 million
Cash$4.7 billion
Debt$3.3 billion

(click to enlarge)

(Source: Earnings presentation)

Outlook

Monsanto's fiscal 2014 guidance is as follows:

EPS$5.00-$5.20
Free cash flow$600-$800 million

(click to enlarge)

(Source: Earnings presentation)

Competition

Monsanto's competitors include BASF SE (OTCQX:BASFY), DuPont (DD), and Syngenta (SYT). Here is a table comparing these companies.

CompanyMONBASFYDDSYTIndustry Average (Agricultural Chemicals)
Market Cap:57.98B99.89B58.46B35.93B1.86B
Employees:21,900112,61770,00027,0001.07K
Qtrly Rev Growth (yoy):0.070.020.050.020.17
Revenue:15.06B95.56B35.55B14.33B3.84B
Gross Margin:0.520.250.280.480.28
EBITDA:4.25B12.75B5.58B2.95B297.77M
Operating Margin:0.240.090.110.170.08
Net Income:2.50B6.06B2.68B1.79BN/A
EPS:4.666.605.123.882.25
P/E:23.7516.4812.3020.1311.67
PEG (5 yr expected):1.548.542.14N/A1.63
P/S:3.951.051.662.51

0.64

Monsanto 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.

CompanyInsider buying / sharesInsider selling / shares
BASFYN/AN/A
DD

0

1,084,843
SYTN/AN/A

Only Monsanto has seen intensive insider selling during the last 30 days.

Conclusion

There have been four different insiders selling Monsanto, and there have not been any insiders buying Monsanto during the last 30 days. Three of these four insiders decreased their holdings by more than 10%. Monsanto has an insider ownership of 0.30%.

Before going short Monsanto, 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.

Source: Monsanto: 4 Different Insiders Have Sold Shares This Year