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%.
Northrop Grumman Corporation (NYSE:NOC) provides systems, products, and solutions in aerospace, electronics, information systems, and technical service areas to government and commercial customers worldwide.
Insider selling during the last 30 days
Here is a table of Northrop Grumman's insider activity during the last 30 days.
|Name||Title||Trade Date||Shares Sold||Rule 10b5-1||Current Ownership||Decrease In Ownership|
|Denise Peppard||VP||Feb 27||4,548||No||11,961 shares||27.5%|
|Gloria Flach||VP||Feb 24||5,997||Yes||11,937 shares||33.4%|
|Michael Hardesty||VP||Feb 24||3,620||No||8,578 shares||29.7%|
|James Palmer||CFO||Feb 11-24||44,589||Yes||237,143 shares||15.8%|
|Sheila Cheston||VP||Feb 18-21||22,862||Yes||41,738 shares||35.4%|
|Vic Fazio||Director||Feb 19||3,281||No||33,696 shares||8.9%|
|Linda Mills||VP||Feb 12||46,869||No||82,894 shares||36.1%|
|Aulana Peters||Director||Feb 12||281||No||23,974 shares||1.2%|
|Wesley Bush||CEO||Feb 11||30,000||Yes||65,501 shares||31.4%|
There have been 162,047 shares sold by insiders during the last 30 days. Gloria Flach, James Palmer, Sheila Cheston, and Wesley Bush 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 Northrop Grumman's insider activity by calendar month.
|Month||Insider selling / shares||Insider buying / shares|
There have been 743,527 shares sold, and there have been 1,000 shares purchased by insiders since January 2013. The month of February 2014 has seen the most insider selling.
Northrop Grumman reported the full-year 2013 financial results on January 30 with the following highlights:
|Net income||$2.0 billion|
Northrop Grumman's revenues peaked in 2010.
Northrop Grumman's 2014 guidance is as follows:
(Source: Earnings presentation)
|Qtrly Rev Growth (yoy):||-0.05||0.07||0.00||-0.05|
|PEG (5 yr expected):||1.72||1.67||1.88||2.17|
Northrop Grumman, together with Lockheed Martin, has the weakest revenue growth among these four companies.
Here is a table of these competitors' insider activities this year.
|Company||Insider buying / shares||Insider selling / shares|
There have been nine different insiders selling Northrop Grumman, and there have not been any insiders buying Northrop Grumman during the last 30 days. Seven of these nine insiders decreased their holdings by more than 10%. Northrop Grumman has an insider ownership of 0.40%.
There are four analyst buy ratings, 16 neutral ratings, and zero sell ratings with an average price target of $119.88. Before going short Northrop Grumman, I would like to get a bearish confirmation from the Point and Figure chart. The three main reasons for the proposed short entry are bearish analyst price targets, negative revenue growth, and the intensive insider-selling activity.
Disclosure: I have no positions in any stocks mentioned, but may initiate a short position in BA over 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.