In this article, I will feature one chemicals company 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%.
The Dow Chemical Company (NYSE:DOW) manufactures and supplies chemical products for use as raw materials in the manufacture of customer products and services worldwide.
Insider selling during the last 30 days
Here is a table of Dow Chemical's insider activity during the last 30 days.
|Name||Title||Trade Date||Shares Sold||Rule 10b5-1||Current Ownership||Decrease In Ownership|
|David Kepler||CIO||Feb 10||170,455||Yes||252,988 shares + 130,267 options||30.8%|
|Heinz Haller||EVP||Feb 7||642,125||Yes||563,990 shares + 83,100 options||49.8%|
|Ronald Edmonds||VP||Feb 7||10,000||Yes||66,818 shares||13.0%|
|Jacqueline Barton||Director||Feb 7||156||No||34,830 shares||0.4%|
There have been 822,736 shares sold by insiders during the last 30 days. David Kepler, Heinz Haller, and Ronald Edmonds 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 Dow Chemical's insider activity by calendar month.
|Month||Insider selling / shares||Insider buying / shares|
There have been 1,086,295 shares sold, and there have been 100 shares purchased by insiders since January 2013. The month of February 2014 has seen the most insider selling.
Dow Chemical reported the full-year 2013 financial results on January 29 with the following highlights:
|Net income||$4.4 billion|
Dow Chemical's revenues peaked in 2011.
Dow Chemical's 2014 guidance is as follows:
(Source: Earnings presentation)
|Qtrly Rev Growth (yoy):||0.03||0.01||0.05|
|PEG (5 yr expected):||1.46||8.94||1.91|
Dow Chemical has the lowest gross margin among these three companies.
Here is a table of these competitors' insider activities this year.
|Company||Insider buying / shares||Insider selling / shares|
DuPont has also seen intensive insider selling during the last 30 days.
There have been four different insiders selling Dow Chemical, and there have not been any insiders buying Dow Chemical during the last 30 days. Three of these four insiders decreased their holdings by more than 10%. Dow Chemical has an insider ownership of 0.20%.
Before going short Dow Chemical, I would like to get a bearish confirmation from the Point and Figure chart. The two main reasons for the proposed short entry are 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.