In this article, I will feature one industrial 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%.
General Dynamics Corporation (NYSE:GD) provides business aviation; combat vehicles, weapons systems, and munitions; military and commercial shipbuilding; and communications and information technology products and services worldwide.
Insider selling during the last 30 days
Here is a table of General Dynamics' insider-trading activity during the last 30 days by insider.
|Name||Title||Trade Date||Shares Sold||Rule 10b5-1||Current Ownership||Decrease In Ownership|
|Kimberly Kuryea||VP||Feb 20||7,676||No||25,160 shares + 1,360 options||22.4%|
|Mark Roualet||EVP||Feb 19||32,502||No||92,971 shares||25.9%|
|Daniel Johnson||VP||Feb 18||78,480||No||46,902 shares||62.6%|
|Larry Flynn||VP||Feb 6||65,115||No||57,038 shares + 19,555 options||46.0%|
|Gregory Gallopoulos||SVP||Jan 30||34,178||No||84,455 shares||28.8%|
|Robert Walmsley||Director||Jan 27||4,456||No||13,311 shares||25.1%|
There have been 222,407 shares sold by insiders during the last 30 days.
Insider selling by calendar month
Here is a table of General Dynamics' insider-trading activity by calendar month.
|Month||Insider selling / shares||Insider buying / shares|
There have been 1,351,926 shares sold, and there have been 5,000 shares purchased by insiders since January 2013.
General Dynamics reported the full-year 2013 financial results on January 22 with the following highlights:
|Net income||$2.4 billion|
General Dynamics' revenues peaked two years ago.
General Dynamics' 2014 guidance is as follows:
|Qtrly Rev Growth (yoy):||0.00||0.07||-0.05||0.04|
|PEG (5 yr expected):||1.85||1.67||2.18||1.07|
General Dynamics has the highest P/S ratio among these four companies.
Here is a table of these competitors' insider-trading activities this year.
|Company||Insider buying / shares||Insider selling / shares|
Lockheed Martin has also seen intensive insider selling during the last 30 days.
There have been six different insiders selling General Dynamics, and there have not been any insiders buying General Dynamics during the last 30 days. All six of these insiders decreased their holdings by more than 10%. General Dynamics has an insider ownership of 0.60%.
Before going short General Dynamics, I would like to get a bearish confirmation from the Point and Figure chart. The three main reasons for the proposed short entry are relatively high P/S ratio, weak revenue growth, 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.