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In this article, I will feature one specialty chemicals company 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%.

Sigma-Aldrich Corporation (SIAL) develops, manufactures, purchases, and distributes various chemicals, biochemicals, and equipment worldwide.

(click to enlarge)

Insider selling during the last 30 days

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

NameTitleTrade DateShares SoldRule 10b5-1Current OwnershipDecrease In Ownership
Barrett ToanDirectorFeb 1418,000No28,773 shares38.5%
Michael KananVPFeb 11517No5,761 shares + 5,410 options4.4%
Gilles CottierEVPFeb 1128,600No24,958 shares + 15,775 options41.3%

There have been 47,117 shares sold by insiders during the last 30 days.

Insider selling by calendar month

Here is a table of Sigma-Aldrich's insider-trading activity by calendar month.

MonthInsider selling / sharesInsider buying / shares
February 201447,1170
January 201400
December 201310,2000
November 201310,0000
October 201300
September 20137,4001,204
August 2013044
July 201300
June 201300
May 201346,4970
April 201328,9130
March 201300
February 201301,000
January 201315,0000

There have been 165,127 shares sold, and there have been 2,248 shares purchased by insiders since January 2013. The month of February 2014 has seen the most insider selling.

Financials

Sigma-Aldrich reported the full-year 2013 financial results on February 6 with the following highlights:

Revenue$2.7 billion
Net income$491 million
Cash$722 million
Debt$365 million

(click to enlarge)

(Source: Earnings presentation)

Outlook

Sigma-Aldrich's 2014 guidance is as follows:

Organic sales growthlow-to-mid single digit
Adjusted EPS$4.30-$4.40

(click to enlarge)

(Source: Earnings presentation)

Competition

Sigma-Aldrich's competitors include Bayer AG (OTCPK:BAYRY). Here is a table comparing these two companies.

CompanySIALBAYRY
Market Cap:11.49B115.28B
Employees:9,000113,300
Qtrly Rev Growth (yoy):0.04-0.00
Revenue:2.70B51.98B
Gross Margin:0.500.52
EBITDA:821.00M11.62B
Operating Margin:0.250.16
Net Income:491.00M4.07B
EPS:4.064.92
P/E:23.6828.33
PEG (5 yr expected):3.362.06
P/S:4.272.20

Sigma-Aldrich has a higher P/S ratio than its direct competitor.

Conclusion

There have been three different insiders selling Sigma-Aldrich, and there have not been any insiders buying Sigma-Aldrich during the last 30 days. Two of these three insiders decreased their holdings by more than 10%. Sigma-Aldrich has an insider ownership of 0.20%.

There are two analyst buy ratings, 11 neutral ratings, and four sell ratings with an average price target of $90. Before going short Sigma-Aldrich, I would like to get a bearish confirmation from the Point and Figure chart. The three main reasons for the proposed short entry are bearish analyst price targets, relatively high P/S ratio, and the intensive insider-selling activity.

Source: Sigma-Aldrich: 3 Different Insiders Have Sold Shares This Month