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In this article, I will feature one consumer 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%.

Harley-Davidson (HOG) manufactures heavyweight cruiser and touring motorcycles.

(click to enlarge)

Insider selling during the last 30 days

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

NameTitleTrade DateShares SoldRule 10b5-1Current OwnershipDecrease In Ownership
Paul JonesVPFeb 730,000No11,620 shares + 42,352 options35.7%
Keith WandellCEOFeb 650,000No190,935 shares + 584,968 options6.1%
Tonit CalawayVPFeb 6-711,124No10,911 shares + 34,542 options19.7%
Joanne BischmannVPFeb 6-72,323No11,313 shares + 60,033 options3.2%

There have been 93,447 shares sold by insiders during the last 30 days.

Insider selling by calendar month

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

MonthInsider selling / sharesInsider buying / shares
February 201493,4470
January 201400
December 201300
November 20131,0060
October 20138,8830
September 201300
August 2013122,2250
July 201300
June 201300
May 201300
April 201300
March 201300
February 201337,4690
January 201315,6120

There have been 278,642 shares sold, and there have been zero shares purchased by insiders since January 2013.

Financials

Harley-Davidson reported the full-year 2013 financial results on January 30 with the following highlights:

Revenue$5.9 billion
Net income$734.0 million
Cash$1.2 billion
Debt$5.3 billion

(Source: Earnings presentation)

Outlook

Harley-Davidson expects to ship 279,000 to 284,000 motorcycles to dealers and distributors worldwide in 2014, an approximate 7% to 9% increase from 2013 shipments. In the first quarter of 2014, the company expects to ship 76,500 to 81,500 motorcycles, compared to 75,222 motorcycles shipped in the year-ago period.

(Source: Earnings presentation)

Competition

Harley-Davidson's competitors include Honda Motor Company (HMC), Suzuki Motor (OTCPK:SZKMF), Yamaha Motor (OTCPK:YAMHF), and Kawasaki Heavy Industries (OTCPK:KWHIY). Here is a table comparing these companies.

CompanyHOGHMCSZKMFYAMHFKWHIY
Market Cap:14.25B65.75B14.70B4.45B27.83B
Employees:N/A190,338N/AN/AN/A
Qtrly Rev Growth (yoy):0.020.250.190.240.49
Revenue:5.90B146.01B34.58B17.10B16.82B
Gross Margin:0.360.26N/AN/AN/A
EBITDA:1.32B17.66B3.40B939.54M1.44B
Operating Margin:0.200.060.060.030.05
Net Income:733.99M6.09B1.15B248.13M442.37M
EPS:3.283.381.960.710.27
P/E:19.6910.7913.4017.9262.83
PEG (5 yr expected):1.04N/AN/AN/AN/A
P/S:2.430.450.420.261.68

Harley-Davidson has the highest P/S ratio among these five companies.

Conclusion

There have been four different insiders selling Harley-Davidson, and there have not been any insiders buying Harley-Davidson during the last 30 days. Two of these four insiders decreased their holdings by more than 10%. Harley-Davidson has an insider ownership of 0.10%.

Harley-Davidson has a $51 price target from the Point and Figure chart. I believe there is an opportunity for a short entry with the $51 price target. I would place a stop loss at $70, which is the all-time high. The three main reasons for the proposed short entry are bearish Point and Figure chart, relatively high P/S ratio, and the intensive insider-selling activity.

(click to enlarge)

Source: Harley-Davidson: 4 Different Insiders Have Sold Shares This Month