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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:

  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%.

AMN Healthcare Services (NYSE:AHS) provides healthcare workforce solutions and staffing services to healthcare facilities in the United States.

(click to enlarge)

Insider selling during the last 30 days

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

NameTitleTrade DateShares SoldRule 10b5-1Current OwnershipDecrease In Ownership
Brian ScottCFOJan 10-2916,621Yes33,650 shares33.1%
Denise JacksonSVPJan 10-2919,148Yes74,640 shares20.4%
Ralph HendersonPresident, Healthcare StaffingJan 14-2919,428Yes

72,703 shares

21.1%

There have been 55,197 shares sold by insiders during the last 30 days. All these shares were sold pursuant to a Rule 10b5-1 plan.

SEC Rule 10b5-1 is a regulation enacted by the United States Securities and Exchange Commission (SEC) in 2000. The SEC states that Rule 10b5-1 was enacted in order to resolve an unsettled issue over the definition of insider trading, which is prohibited by SEC Rule 10b-5. After Rule 10b5-1 was enacted, the SEC staff publicly took the position that canceling a planned trade made under the safe harbor does not constitute insider trading, even if the person was aware of the inside information when canceling the trade. This staff interpretation raises the possibility that executives can exploit this safe harbor by entering into 10b5-1 trading plans before they have inside information while retaining the option to later cancel those plans based on inside information.

For example, a CEO of a company could call a broker on January 1 and enter into a plan to sell a particular quantity of shares of his company's stock on March 1, find out terrible news about his company on February 1 that will not become public until April 1, and then go forward with the March 1 sale anyway, saving himself from losing money when the bad news becomes public. Under the terms of Rule 10b5-1(b) this is insider trading because the CEO "was aware" of the inside information when he made the trade. But he can assert an affirmative defense under Rule 10b5-1(c), because he planned the trade before he learned the inside information.

In general, it is a safer way for an insider to sell shares pursuant to a Rule 10b5-1 trading plan than without it.

Insider selling by calendar month

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

MonthInsider selling / sharesInsider buying / shares
January 201455,1970
December 201300
November 201310,0000
October 201300
September 201300
August 201373,2700
July 20136,0000
June 201310,2990
May 201310,0000
April 20134,0000
March 201317,4890
February 201378,0400
January 20137,5000

There have been 271,795 shares sold, and there have been zero shares purchased by insiders since January 2013.

Financials

AMN reported the third-quarter financial results on October 31 with the following highlights:

Revenue$257.1 million
Net income$8.6 million
Cash$31.7 million
Debt$148.6 million

(Source: Earnings presentation)

Outlook

AMN expects the typical fourth quarter seasonal decline, combined with the moderate demand environment in Nurse and Allied Staffing, to result in consolidated revenue of $246 million to $250 million.

(Source: Earnings presentation)

Competition

AMN's competitors include Cross Country Healthcare (NASDAQ:CCRN), and On Assignment (NYSE:ASGN). Here is a table comparing these companies.

CompanyAHSCCRNASGN
Market Cap:693.80M340.69M1.63B
Employees:1,700N/A1,598
Qtrly Rev Growth (yoy):0.080.010.48
Revenue:997.82M443.15M1.62B
Gross Margin:0.290.250.30
EBITDA:74.05M3.50M168.44M
Operating Margin:0.06-0.010.08
Net Income:27.59M-22.45M49.96M
EPS:0.61-1.311.15
P/E:24.76N/A26.49
PEG (5 yr expected):1.6156.101.75
P/S:0.680.770.96
Insider Ownership:1.20%12.35%10.10%

AMN has the lowest insider ownership among these three companies.

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

CompanyInsider buying / sharesInsider selling / shares
CCRN10,00018,695
ASGN1,6912,466,552

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

Conclusion

There have been three different insiders selling AMN, and there have not been any insiders buying AMN during the last 30 days. All three of these insiders decreased their holdings by more than 10%. AMN has an insider ownership of 1.20%.

AMN has a $6.5 price target from the Point and Figure chart. I believe there is an opportunity for a short entry with the $6.5 price target. I would place a stop loss at $16, which is the five-year high. The three main reasons for the proposed short entry are bearish Point and Figure chart, weak guidance, and the intensive insider-selling activity.

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Disclosure: I have no positions in any stocks mentioned, but may initiate a short position in AHS over 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.

Source: AMN Healthcare: 3 Different Insiders Have Sold Shares Last Month