Discover Financial: 6 Different Insiders Have Sold Shares This Year

Feb. 2.14 | About: Discover Financial (DFS)

In this article, I will feature one bank 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%.

Discover Financial Services (NYSE:DFS) provides direct banking and payment services in the United States.

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Insider selling during the last 30 days

Here is a table of Discover'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
Roger Hochschild COO Jan 29 100,000 No 1,201,264 shares 7.7%
Diane Offereins EVP Jan 30 50,000 No 387,435 shares 11.4%
Steven Cunningham SVP Jan 28 15,000 No 48,576 shares 23.6%
James Panzarino EVP Jan 28 40,000 No 113,716 shares 26.0%
Carlos Minetti EVP Jan 28 82,231 No 343,749 shares 19.3%
Glenn Schneider SVP Jan 28 29,070 No 40,397 shares 41.8%
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There have been 316,301 shares sold by insiders during the last 30 days.

Insider selling by calendar month

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

Month Insider selling / shares Insider buying / shares
January 2014 316,301 0
December 2013 0 0
November 2013 25,459 0
October 2013 155,610 0
September 2013 0 0
August 2013 234,799 0
July 2013 0 0
June 2013 0 0
May 2013 0 0
April 2013 153,930 0
March 2013 0 0
February 2013 0 0
January 2013 0 0
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There have been 886,099 shares sold, and there have been zero shares purchased by insiders since January 2013. The month of January 2014 has seen the most insider selling.

Financials

Discover reported the full-year 2013 financial results on January 23 with the following highlights:

Net interest income $5.9 billion
Net income $2.4 billion
Book value $22.89 per share
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Competition

Discover's competitors include JPMorgan (NYSE:JPM), Bank of America (NYSE:BAC), and Citigroup (NYSE:C). Here is a table comparing these companies.

Company DFS JPM BAC C
Market Cap: 25.48B 224.88B 178.95B 145.11B
Employees: 13,009 251,196 242,117 251,000
Qtrly Rev Growth (yoy): 0.05 0.00 0.28 0.04
Revenue: 8.17B 96.38B 85.39B 68.76B
Operating Margin: 0.48 0.28 0.20 0.29
Net Income: 2.41B 16.59B 10.08B 13.18B
EPS: 4.96 4.35 0.90 4.42
P/E: 10.82 12.82 18.58 10.80
PEG (5 yr expected): 1.14 1.60 0.61 0.49
P/S: 3.18 2.34 2.24 2.13
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Discover 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
JPM 738,336 737,814
BAC 40,000 619,300
C 585 47,222
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JPMorgan has also seen intensive insider selling during the last 30 days.

Conclusion

There have been six different insiders selling Discover, and there have not been any insiders buying Discover during the last 30 days. Five of these six insiders decreased their holdings by more than 10%. Discover has an insider ownership of 1.10%.

Before going short Discover, 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.