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:
- The stock was sold by three or more insiders within one month.
- The stock was not purchased by any insiders in the month of intensive selling.
- At least two sellers decreased their holdings by more than 10%.
Merck & Co. (NYSE:MRK) provides various health solutions through its prescription medicines, vaccines, biologic therapies, animal health, and consumer care products worldwide.
Insider selling during the last 30 days
Here is a table of Merck's insider-trading activity during the last 30 days.
|Name||Title||Trade Date||Shares Sold||Rule 10b5-1||Current Ownership||Decrease In Ownership|
|Bridgette Heller||EVP||Feb 13||43,870||No||27,586 shares + 24,877 options||45.5%|
|Adam Schechter||EVP||Feb 11||18,000||No||70,507 shares||20.3%|
|Kenneth Frazier||CEO||Feb 11||41,520||No||266,274 shares||13.5%|
|John Canan||SVP||Feb 11||10,000||No||14,041 shares||41.6%|
|Willie Deese||EVP||Feb 10||50,000||No||106,723 shares||31.9%|
|Peter Wendell||Director||Feb 10||5,000||No||1,000 shares||83.3%|
|Wendell Weeks||Director||Feb 10||5,000||No||200 shares||96.2%|
There have been 173,390 shares sold by insiders during the last 30 days.
Insider selling by calendar month
Here is a table of Merck's insider-trading activity by calendar month.
|Month||Insider selling / shares||Insider buying / shares|
There have been 604,874 shares sold, and there have been zero shares purchased by insiders since January 2013.
Merck reported the full-year 2013 financial results on February 5 with the following highlights:
|GAAP net income||$4.4 billion|
Merck's revenues peaked in 2012.
Merck's 2014 guidance is as follows:
Merck's pipeline as of October 31, 2013 consisted of the following.
|Qtrly Rev Growth (yoy):||-0.04||0.02||0.02||N/A|
|PEG (5 yr expected):||8.99||2.07||3.02||6.63|
Merck has the second-highest P/S ratio among these four companies.
Here is a table of these competitors' insider-trading activities this year.
|Company||Insider buying / shares||Insider selling / shares|
Only Merck has seen intensive insider selling during the last 30 days.
There have been seven different insiders selling Merck, and there have not been any insiders buying Merck during the last 30 days. All seven of these insiders decreased their holdings by more than 10%. Merck has an insider ownership of 0.03%.
Before going short Merck, I would like to get a bearish confirmation from the Point and Figure chart. The two main reasons for the proposed short entry are negative revenue growth, and the intensive insider-selling activity.