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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:

  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%.

E. I. du Pont de Nemours and Company (NYSE:DD) is a science and engineering company that offers products and patents applications for agriculture, nutrition, electronics and communications, safety and protection, home and construction, transportation and apparel.

(click to enlarge)

Insider selling during the last 30 days

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

NameTitleTrade DateShares SoldRule 10b5-1Current OwnershipDecrease In Ownership
Mark VergnanoEVPFeb 2566,253No117,040 shares36.1%
Thomas SagerSVPFeb 10-2528,232Yes and No46,782 shares37.6%
Benito CachineroSVPFeb 101,988No59,714 shares3.2%

There have been 96,473 shares sold by insiders during the last 30 days. Thomas Sager sold 23,972 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 DuPont's insider activity by calendar month.

MonthInsider selling / sharesInsider buying / shares
February 201496,4730
January 20146720
December 201355,0000
November 201300
October 201300
September 201370,6920
August 2013190,5220
July 2013107,4630
June 201300
May 2013264,6260
April 2013313,8650
March 201300
February 201322,6750
January 2013161,6990

There have been 1,283,687 shares sold, and there have been zero shares purchased by insiders since January 2013.

Financials

DuPont reported the full-year 2013 financial results on January 28 with the following highlights:

Net sales$35.7 billion
Net income (from continuing operations)$2.9 billion
Cash$9.1 billion
Debt$12.5 billion

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(Source: Earnings presentation)

Outlook

DuPont's 2014 guidance is as follows:

Revenue~$37 billion
EPS$4.20-$4.45

(click to enlarge)

(Source: Earnings presentation)

Competition

DuPont's competitors include BASF (OTCQX:BASFY), and The Dow Chemical Company (NYSE:DOW). Here is a table comparing these companies.

CompanyDDBASFYDOW
Market Cap:61.80B104.95B58.71B
Employees:64,000112,61752,731
Qtrly Rev Growth (yoy):0.050.020.03
Revenue:35.94B95.56B57.08B
Gross Margin:0.370.250.17
EBITDA:5.87B12.75B7.20B
Operating Margin:0.120.090.08
Net Income:2.84B6.06B4.41B
EPS:5.186.603.68
P/E:12.8617.3113.24
PEG (5 yr expected):1.918.941.46
P/S:1.701.081.02

DuPont has the highest P/S ratio among these three companies.

Here is a table of these competitors' insider-trading activities this year.

CompanyInsider buying / sharesInsider selling / shares
BASFYN/AN/A
DOW0822,890

Dow Chemical has also seen intensive insider selling during the last 30 days.

Conclusion

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

Before going short DuPont, 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.

Source: DuPont: 3 Different Insiders Have Sold Shares During The Last 30 Days