Seeking Alpha
Long/short equity, insider ownership
Profile| Send Message|
( followers)  

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:

  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%.

Ligand Pharmaceuticals (NASDAQ:LGND) engages in the acquisition and development of royalty revenue generating assets in the United States.

(click to enlarge)

Insider selling during the last 30 days

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

NameTitleTrade DateShares SoldRule 10b5-1Current OwnershipDecrease In Ownership
Jason AryehDirectorFeb 12-1440,320No280,984 shares12.5%
John SharpCFOFeb 1286,953No17,667 shares + 41,608 options59.5%
Charles BerkmanVPFeb 1214,881No31,645 shares + 50,604 options15.3%
John HigginsCEOJan 16-Feb 1231,875Yes119,099 shares + 143,125 options10.8%
Matthew FoehrCOOFeb 1422,500Yes53,457 shares + 198,056 options8.2%

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.

MonthInsider selling / sharesInsider buying / shares
February 2014181,5290
January 201415,0000
December 201312,7000
November 2013528,6280
October 201310,0000
September 2013519,0230
August 201360,4060
July 201300
June 201300
May 20134,0000
April 201300
March 201300
February 201300
January 2013039,600

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:

Revenue$49.0 million
Net income$11.4 million
Cash$17.3 million
Debt$9.1 million


Ligand's guidance is as follows:

Revenue$13-$14 million$62-$64 million
Non-GAAP EPS$0.22-$0.25$1.40-$1.45

(click to enlarge)

(Source: Investor presentation)

Pipeline and upcoming milestones

Ligand could have 10 new royalty products in the market by 2017.

(click to enlarge)

(Source: Investor presentation)


Ligand's competitors include Eli Lilly and Company (NYSE:LLY), Merck & Co. (NYSE:MRK), and Roche Holding AG (OTCQX:RHHBY). Here is a table comparing these companies.

Market Cap:1.57B58.48B161.99B250.97B
Qtrly Rev Growth (yoy):0.08-0.03-0.040.01
Gross Margin:0.690.790.640.75
Operating Margin:0.330.240.210.34
Net Income:8.83M4.68B4.40B11.96B
PEG (5 yr expected):2.0140.899.052.50

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.

CompanyInsider buying / sharesInsider 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.

Source: Ligand Pharmaceuticals: 5 Different Insiders Have Sold Shares This Month