In this article, I will feature one restaurant 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%.
Yum! Brands (NYSE:YUM) operates quick service restaurants in the United States and internationally.
Insider selling during the last 30 days
Here is a table of Yum! Brands' insider-trading activity during the last 30 days.
|Name||Title||Trade Date||Shares Sold||Rule 10b5-1||Current Ownership||Decrease In Ownership|
|Christain Campbell||SVP||Feb 19||13,157||Yes||13,288 shares||49.8%|
|Richard Carucci||President||Feb 13||78,048||No||34,098 shares||69.6%|
|Patrick Grismer||CFO||Feb 5||1,770||Yes||17,840 shares + 8,316 options||6.3%|
|Jonathan Blum||SVP||Feb 5||3,664||Yes||22,131 shares + 83,394 options||3.4%|
There have been 96,639 shares sold by insiders during the last 30 days. Christain Campbell, Patrick Grismer, and Jonathan Blum 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 Yum! Brands' insider-trading activity by calendar month.
|Month||Insider selling / shares||Insider buying / shares|
There have been 803,488 shares sold, and there have been 55,000 shares purchased by insiders since January 2013.
Yum! Brands reported the full-year 2013 financial results on February 3 with the following highlights:
|Net income||$1.1 billion|
Yum! Brands' revenues peaked 12 months ago.
Yum! Brands expects to deliver at least 20% EPS growth in 2014.
(Source: Investor presentation)
|Qtrly Rev Growth (yoy):||0.01||-0.34||0.02||0.01|
|PEG (5 yr expected):||1.63||1.75||1.97||1.47|
Yum! Brands, together with Wendy's, has the lowest gross margin among these four companies.
Here is a table of these competitors' insider activities during the last 30 days.
|Company||Insider buying / shares||Insider selling / shares|
McDonald's has also seen intensive insider selling during the last 30 days.
There have been four different insiders selling Yum! Brands, and there have not been any insiders buying Yum! Brands during the last 30 days. Two of these four insiders decreased their holdings by more than 10%. Yum! Brands has an insider ownership of 0.20%.
Yum! Brands has a $55 price target from the Point and Figure chart. I believe there is an opportunity for a short entry with the $55 price target. I would place a stop loss at $78, which is the all-time high. The three main reasons for the proposed short entry are negative year-over-year revenue growth, bearish Point and Figure chart, and the intensive insider-selling activity.