Allergan: 8 Different Insiders Have Sold Shares This Month

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 |  About: Allergan plc (AGN), Includes: JNJ, NVS
by: Markus Aarnio

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%.

Allergan (NYSE:AGN) operates as a multi-specialty healthcare company primarily in the United States, Europe, Latin America, and the Asia Pacific.

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Insider selling during the last 30 days

Here is a table of Allergan's insider activity during the last 30 days.

Name Title Trade Date Shares Sold Rule 10b5-1 Current Ownership Decrease In Ownership
Dawn Hudson Director Feb 19 4,200 No 11,600 shares 26.6%
Jeffrey Edwards CFO Feb 7-19 144,400 No 20,259 shares 87.7%
Raymond Diradoorian EVP Feb 11-19 40,000 No 17,912 shares + 23,000 options 49.4%
Scott Sherman EVP Feb 7-18 14,501 No 9,478 shares + 30,000 options 26.9%
Douglas Ingram President Feb 14 84,000 No 30,101 shares 73.6%
Louis Lavigne Director Feb 11 54,600 No 22,923 shares 70.4%
James Barlow SVP Feb 12 23,875 No 9,289 shares + 26,050 options 40.3%
David Pyott CEO Feb 12 252,000 No 399,168 shares 38.7%
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There have been 617,576 shares sold by insiders during the last 30 days.

Insider selling by calendar month

Here is a table of Allergan's insider activity by calendar month.

Month Insider selling / shares Insider buying / shares
February 2014 617,576 0
January 2014 108,200 0
December 2013 85,500 0
November 2013 3,000 0
October 2013 2,000 0
September 2013 2,000 0
August 2013 71,200 0
July 2013 2,000 0
June 2013 2,000 0
May 2013 86,000 0
April 2013 35,200 0
March 2013 25,300 0
February 2013 2,000 0
January 2013 31,700 0
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There have been 1,073,676 shares sold, and there have been zero shares purchased by insiders since January 2013. The month of February 2014 has seen the most insider selling.

Financials

Allergan reported the full-year 2013 financial results on February 5 with the following highlights:

Revenue $6.3 billion
Net income $985.1 million
Cash $3.6 billion
Debt $2.2 billion
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Outlook

Allergan's guidance is as follows:

Q1/2014 FY2014
Total product net sales $1,525-$1,600 million $6,650-$6,950 million
Non-GAAP EPS $1.09-$1.12 $5.36-$5.48
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Pipeline and upcoming milestones

Allergan's pipeline consists of the following product candidates.

(Source: Allergan)

Competition

Allergan's competitors include Johnson & Johnson (NYSE:JNJ), and Novartis AG (NYSE:NVS). Here is a table comparing these companies.

Company AGN JNJ NVS
Market Cap: 37.12B 258.22B 200.52B
Employees: 11,400 128,000 135,696
Qtrly Rev Growth (yoy): 0.12 0.05 0.02
Revenue: 6.30B 71.31B 58.83B
Gross Margin: 0.88 0.69 0.67
EBITDA: 2.12B 22.96B 16.20B
Operating Margin: 0.31 0.27 0.19
Net Income: 985.10M 13.83B 9.18B
EPS: 3.26 4.81 3.70
P/E: 38.37 19.04 22.34
PEG (5 yr expected): 1.78 2.68 2.90
P/S: 5.99 3.63 3.39
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Allergan has the highest P/S ratio among these three companies.

Here is a table of these competitors' insider activities during the last 12 months.

Company Insider buying / shares Insider selling / shares
JNJ 0 113,709
NVS N/A N/A
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Only Allergan has seen intensive insider selling during the last 30 days.

Conclusion

There have been eight different insiders selling Allergan, and there have not been any insiders buying Allergan during the last 30 days. All eight of these insiders decreased their holdings by more than 10%. Allergan has an insider ownership of 0.10%.

Before going short Allergan, 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.