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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%.

Green Mountain Coffee Roasters (NASDAQ:GMCR) is engaged in the specialty coffee and coffeemaker businesses in the United States and Canada.

(click to enlarge)

Insider selling during the last 30 days

Here is a table of Green Mountain Coffee Roasters' insider-trading activity during the last 30 days.

NameTitleTrade DateShares SoldRule 10b5-1Current OwnershipDecrease In Ownership
Sylvain ToutantPresident, CanadaFeb 10-1110,921No325 shares + 16,843 options38.9%
John WhoriskeyPresident, US Sales, MarketingFeb 10-114,889No281 shares + 7,227 options39.4%
Gerard GeoffrionPresident, InternationalFeb 1021,250No1,476 shares + 8,750 options67.5%
Stephen GibbsVPFeb 115,352No

116 shares + 8,199 options

39.2%
Jules del VecchioDirectorFeb 1160,500No281,903 shares + 20,500 options16.7%
Linda Longo-KazanovaVPFeb 1010,000No1,639 shares + 20,000 options31.6%
Barbara CarliniDirectorFeb 1020,250No14,434 shares58.4%
David MoranDirectorFeb 620,000Yes6,114 shares + 21,000 options42.5%
Hinda MillerDirectorFeb 619,800Yes79,516 shares19.9%

There have been 172,962 shares sold by insiders during the last 30 days. David Moran and Hinda Miller 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 Green Mountain Coffee Roasters' insider-trading activity by calendar month.

MonthInsider buying / sharesInsider selling / shares
February 20140172,962
January 2014040,000
December 201300
November 201322,0000
October 201300
September 201300
August 201317,00031,750
July 201300
June 20130100,000
May 20130483,700
April 20130270,000
March 2013035,000
February 2013070,000
January 20130100,000

There have been 39,000 shares purchased, and there have been 1,303,412 shares sold by insiders since January 2013.

Financials

Green Mountain Coffee Roasters reported the fiscal 2014 first-quarter, which ended December 28, financial results on February 5 with the following highlights:

Revenue$1.4 billion
Net income [GAAP]$138.2 million
Cash$348.7 million
Debt$259.8 million

Outlook

Green Mountain Coffee Roasters' guidance is as follows:

Q2/2014FY2014
Net sales growthlow-to-mid single digits over the second quarter of fiscal year 2013high single digits over fiscal year 2013
Non-GAAP EPS$0.93-$0.98$3.75-$3.85

Competition

Green Mountain Coffee Roasters' competitors include Nestle S.A. (OTCPK:NSRGY), and Starbucks (NASDAQ:SBUX). Here is a table comparing these companies.

CompanyGMCRNSRGYSBUX
Market Cap:17.92B236.42B56.10B
Employees:6,300339,000182,000
Qtrly Rev Growth (yoy):0.040.050.12
Revenue:4.41B101.39B15.34B
Gross Margin:0.380.480.57
EBITDA:1.04B19.21B3.05B
Operating Margin:0.180.160.15
Net Income:513.88M11.56B116.80M
EPS:3.373.620.15
P/E:36.0620.41481.49
PEG (5 yr expected):1.905.351.43
P/S:4.052.363.64

Green Mountain Coffee Roasters has the highest P/S ratio among these three companies.

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

CompanyInsider buying / sharesInsider selling / shares
NSRGYN/AN/A
SBUX7,000739,307

Only Green Mountain Coffee Roasters has seen intensive insider selling during the last 30 days.

Conclusion

There have been nine different insiders selling Green Mountain Coffee Roasters, and there have not been any insiders buying Green Mountain Coffee Roasters during the last 30 days. All nine of these insiders decreased their holdings by more than 10%. Green Mountain Coffee Roasters has an insider ownership of 0.10%.

Before going short Green Mountain Coffee Roasters, 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: Green Mountain Coffee Roasters: 9 Different Insiders Have Sold Shares This Month