A study titled "Predictive and Statistical Properties of Insider Trading" by James H. Lorie and Victor Niederhoffer reached the following conclusion:
This study indicates that proper and prompt analysis of data on insider trading can be profitable, although almost all previously published studies have reached the contrary conclusion. When insiders accumulate a stock intensively, the stock can be expected to outperform the market during the next six months. Insiders tend to buy more often than usual before large price increases and to sell more than usual before price decreases.
Based on the findings of this encouraging insider trading study, I screened for companies where at least one insider made a sell transaction filed on September 10. I chose the top five companies with insider selling in dollar terms. Here is a look at the five stocks:
1. Visa (V) is a global payments technology company that connects consumers, businesses, financial institutions and governments in more than 200 countries and territories to fast, secure and reliable digital currency. Underpinning digital currency is one of the world's most advanced processing networks - VisaNet - that is capable of handling more than 20,000 transaction messages a second, with fraud protection for consumers and guaranteed payment for merchants. Visa is not a bank and does not issue cards, extend credit or set rates and fees for consumers. Visa's innovations, however, enable its financial institution customers to offer consumers more choices: pay now with debit, ahead of time with prepaid or later with credit products.
- Joseph Saunders sold 264,959 shares on September 7 via a Rule 10b5-1 trading plan and currently controls 103,907 shares of the company. Joseph Saunders is chairman and chief executive officer of Visa.
- Elizabeth Buse sold 14,401 shares on September 6 via a Rule 10b5-1 trading plan and currently controls 23,110 shares of the company. Elizabeth Buse is the group president, APCEMEA for Visa.
The company reported the fiscal third-quarter 2012 ended June 30, 2012 financial results on July 25 with the following highlights:
|Net loss||$1.8 billion|
On a GAAP basis, the company reported a net loss of $1.8 billion, inclusive of a litigation provision of $4.1 billion, related to the previously announced settlement agreement in the Multi-District Litigation case.
Visa updated its financial outlook for the following metric through 2012:
- Adjusted annual diluted class A common stock earnings per share growth in the low twenties.
Visa affirmed its financial outlook for the following metrics for 2012:
- Annual net revenue growth in the low double digits;
- Client incentives as a percent of gross revenues: 17% to 18% range;
- Marketing expenses: Under $1 billion;
- Adjusted annual operating margin of about 60%;
- Adjusted tax rate: 33% to 34% range;
- Capital expenditures $350 million to $400 million range; and
- Annual free cash flow greater than $4 billion.
The stock has a $156 price target from the Point and Figure chart. There has been steady insider selling since November 2011. There has not been any insider buying since at least November 2011. The stock is trading at a forward P/E of 18.02. I would recommend waiting until the $156 level before shorting the stock.
2. Google (GOOG) is a global technology leader focused on improving the ways people connect with information. Google's innovations in web search and advertising have made its website a top internet property and its brand one of the most recognized in the world.
- Lawrance Page sold 27,778 shares on September 10. Lawrance Page is the CEO of the company.
- Patrick Pichette sold 1,964 shares on September 10. Patrick Pichette is SVP & Chief Financial Officer of the company.
- Kavitark Shriram sold 72,604 shares on September 7. Kavitark Shriram serves as a director of the company.
- Sergey Brin sold 83,334 shares on September 4. Sergey Brin is the Co-Founder of the company.
- John Doerr sold 12,285 shares on September 4. John Doerr serves as a director of the company.
- John Hennessy sold 74 shares on September 4. John Hennessy serves as a director of the company.
- Eric Schmidt sold 50,000 shares on August 29 and 103,193 shares on August 27-28. Eric Schmidt serves as Executive Chairman of Board.
The company reported the second-quarter financial results on July 19 with the following highlights:
|Net income||$2.8 billion|
The stock has a $685 price target from the Point and Figure chart which has been met already. The stock has seen steady insider selling since July 2012. There has not been any insider buying since at least July 2012. The stock is trading at a forward P/E of 14.18. The stock is currently trading very close to its all time high levels. I have a neutral bias for the stock currently.
3. Oasis (OAS) is an independent exploration and production company focused on the acquisition and development of unconventional oil and natural gas resources, primarily operating in the Williston Basin.
Spo Advisory Corporation sold 300,000 shares on September 6 and currently controls 9,215,949 shares of the company. Spo Advisory Corporation is a 10% owner of Oasis according to SEC filings.
The company reported the second-quarter financial results on August 6 with the following highlights:
|Net income||$76.0 million|
Oasis provided an updated outlook for 2012 on August 6 as follows:
|Total Net Wells||92.8|
|Average Daily Production (MBoepd)||20.5 - 22.5|
The stock has a $44 price target from the Point and Figure chart. The stock has seen steady insider selling since May 2011. There has not been any insider buying this year. The stock is trading at a forward P/E of 13.42. I would recommend waiting until the $44 level before shorting the stock.
4. The Hain Celestial Group (HAIN), headquartered in Melville, NY, is a leading natural and organic products company in North America and Europe. Hain Celestial participates in many natural categories with well-known brands that include Celestial Seasonings, Earth's Best, Terra, Garden of Eatin', Sensible Portions, Health Valley, Arrowhead Mills, MaraNatha, SunSpire, DeBoles, Gluten Free Cafe, Hain Pure Foods, Hollywood, Spectrum Naturals, Spectrum Essentials, Walnut Acres Organic, Imagine, Almond Dream, Rice Dream, Soy Dream, WestSoy, The Greek Gods, Ethnic Gourmet, Yves Veggie Cuisine, Europe's Best, Cully & Sully, New Covent Garden Soup Co., Johnson's Juice Co., Farmhouse Fare, Linda McCartney, Lima, Danival, GG UniqueFiber, Grains Noirs, Natumi, JASON, Zia Natural Skincare, Avalon Organics, Alba Botanica, Queen Helene and Earth's Best TenderCare. Hain Celestial has been providing A Healthy Way of Life since 1993.
Ira Lamel sold 109,084 shares on September 6-10 and currently holds 36,066 shares of the company. The Hain Celestial Group announced on September 5 the planned retirement of Ira Lamel, Executive Vice President and Chief Financial Officer. It is expected that Ira Lamel, who is 65 years old, will remain with the company until a successor is named and to ensure an orderly transition.
The company reported the results for the fiscal year ended June 30, 2012 on August 22 with the following highlights:
|Net income||$79.2 million|
The company provided the following guidance for its fiscal year 2013.
- Total net sales range of $1.600 billion to $1.615 billion in sales, approximating 10% to 11% growth over its annualized fiscal year 2012 sales base.
- Earnings of $2.10 to $2.20 per diluted share.
The stock has a $75 price target from the Point and Figure chart. The stock has seen steady insider selling since February 2011. There has not been any insider buying this year. The stock is trading at a forward P/E of 25.37. The stock is trading just $4 shy of its price target which could present a good short opportunity.
5. Ultimate (ULTI) is a leading SaaS provider of people management solutions, with more than 7 million people records in the cloud. Built on the belief that people are the most important ingredient of any business, Ultimate's award-winning UltiPro delivers HR, payroll, and talent management solutions that seamlessly connect people with the information and resources they need to work more effectively. Founded in 1990, the company is headquartered in Weston, Florida, and has more than 1,500 professionals focused on developing the highest quality solutions and services. In 2012, Ultimate was ranked #25 on FORTUNE'S "100 Best Companies to Work For" list. Ultimate has more than 2,300 customers with employees in 115 countries, including Adobe Systems Incorporated (ADBE), The Container Store, Culligan International, Major League Baseball, The New York Yankees Baseball Team, and Texas Roadhouse.
Rick Wilber sold 50,000 shares on September 6-7 and currently holds 185,608 shares of the company. Rick Wilber serves as a director of the company.
The company reported the second-quarter financial results on July 31 with the following highlights:
|Net income||$2.7 million|
For the third quarter of 2012:
- Recurring revenues of approximately $68.0 million,
- Total revenues of approximately $84.0 million, and
- Operating margin, on a non-GAAP basis, of approximately 16%.
For the year 2012:
- Recurring revenues to increase by approximately 25% over 2011,
- Total revenues to increase by approximately 23% over 2011, and
- Operating margin, on a non-GAAP basis, of approximately 15%.
The stock has a $115 price target from the Point and Figure chart. The stock has seen steady insider selling since October 2011. There has not been any insider buying since at least October 2011. The stock is trading at a forward P/E of 70.45. I would recommend waiting until the $115 level before shorting the stock.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.