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%.
Ligand Pharmaceuticals (NASDAQ:LGND) engages in the acquisition and development of royalty revenue generating assets in the United States.
Insider selling during the last 30 days
Here is a table of Ligand'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|
|Jason Aryeh||Director||Feb 12-14||40,320||No||280,984 shares||12.5%|
|John Sharp||CFO||Feb 12||86,953||No||17,667 shares + 41,608 options||59.5%|
|Charles Berkman||VP||Feb 12||14,881||No||31,645 shares + 50,604 options||15.3%|
|John Higgins||CEO||Jan 16-Feb 12||31,875||Yes||119,099 shares + 143,125 options||10.8%|
|Matthew Foehr||COO||Feb 14||22,500||Yes||53,457 shares + 198,056 options||8.2%|
There have been 196,529 shares sold by insiders during the last 30 days. John Higgins and Matthew Foehr 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 Ligand's insider-trading activity by calendar month.
|Month||Insider selling / shares||Insider buying / shares|
There have been 1,331,286 shares sold, and there have been 39,600 shares purchased by insiders since January 2013.
Ligand reported the full-year 2013 financial results on February 11 with the following highlights:
|Net income||$11.4 million|
Ligand's guidance is as follows:
|Revenue||$13-$14 million||$62-$64 million|
(Source: Investor presentation)
Pipeline and upcoming milestones
Ligand could have 10 new royalty products in the market by 2017.
(Source: Investor presentation)
|Qtrly Rev Growth (yoy):||0.08||-0.03||-0.04||0.01|
|PEG (5 yr expected):||2.01||40.89||9.05||2.50|
Ligand 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|
Merck has also seen intensive insider selling during the last 30 days.
There have been five different insiders selling Ligand, and there have not been any insiders buying Ligand during the last 30 days. Four of these five insiders decreased their holdings by more than 10%. Ligand has an insider ownership of 1.60%.
Before going short Ligand, 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.