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The conglomerates sector has been the worst performing group during the last six months, with a 5.9% loss during that period.

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Based on this observation I screened the conglomerates sector for companies where at least two insiders made a sell transaction during the past three months. Here is a look at the four stocks that I found.

1. Rayonier (NYSE:RYN) is a leading international forest products company with three core businesses: Forest Resources, Real Estate and Performance Fibers. The company owns, leases or manages 2.7 million acres of timber and land in the United States and New Zealand. The company's holdings include approximately 200,000 acres with residential and commercial development potential along the Interstate 95 corridor between Savannah, Ga., and Daytona Beach, Fla. Its Performance Fibers business is one of the world's leading producers of high-value specialty cellulose fibers, which are used in products such as filters, pharmaceuticals and LCD screens. Approximately 45 percent of the company's sales are outside the U.S. to customers in approximately 40 countries. Rayonier is structured as a real estate investment trust.

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Insider sells

Financials

The company reported the second-quarter financial results on July 26 with the following highlights:

Revenue$371.9 million
Net income$69.1 million
Cash$189.1 million

Outlook

Paul G. Boynton, Chairman, President and CEO, commented on July 26:

"As we enter the second-half of 2012, we are well positioned for another strong year and are pleased to be able to increase the dividend by 10 percent, our eighth increase in the past ten years. In Forest Resources, we will continue to capitalize on local market opportunities in the Southeast, and will increase harvest volumes in the Northwest as Asian markets improve. In Performance Fibers, we anticipate another record year driven by strong cellulose specialties markets. Also, we remain on track to complete our cellulose specialties expansion project by mid-2013. We expect full year earnings to be comparable to 2011, excluding special items, and CAD to range from $295 million to $310 million, substantially above our dividend."

My analysis

The stock has a $72 price target from the Point and Figure chart. There have been 15 insider sell transactions and two insider buy transactions this year. The stock is trading at a P/E ratio of 21.95 and a forward P/E ratio of 20.15. The company has a book value of $11.09 per share and the stock has a 3.58% dividend yield. I am not interested in shorting the stock before the $72 price target is hit.

2. United Technologies Corporation (NYSE:UTX) is a diversified company providing high technology products and services to the building and aerospace industries.

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Insider sells

  • Elizabeth Amato sold 10,000 shares on September 14 and 10,000 shares on August 7. Elizabeth Amato is Senior Vice President, Human Resources & Organization.
  • Louis Chênevert sold 14,000 shares on September 14. Louis Chênevert is Chairman & Chief Executive Officer of United Technologies Corporation.
  • Thomas Bowler sold 50,800 shares on September 14. Thomas Bowler, Jr. was elected Senior Vice President Human Resources and Organization of United Technologies Corporation in December 2007.
  • Andre Villeneuve sold 15,000 shares on September 12. Andre Villeneuve serves as a director of the company.
  • Peter Longo sold 10,800 shares on August 17. Peter Longo serves as Vice President, Controller.
  • Charles Gill sold 2,750 shares on August 8. Charles Gill is Senior Vice President and General Counsel of United Technologies Corporation. He was elected to this position in April 2007.

Financials

The company reported the second-quarter financial results on July 26 with the following highlights:

Revenue$13.8 billion
Net income$1.3 billion
Cash$6.0 billion

Outlook

United Technologies Corporation company officials met with investors on September 7 and affirmed UTC's expectations for 2012 earnings per share of $5.25 to $5.35 from continuing operations, on sales of $58 billion to $59 billion. Greg Hayes, UTC Senior Vice President and Chief Financial Officer, also told investors UTC continues to expect cash flow from operations less capital expenditures to meet or exceed net income attributable to common shareowners for the year. Greg Hayes commented on September 7:

"Strong cash generation and proceeds from anticipated divestitures will enable us to pay down approximately one-third of the debt issued for the Goodrich acquisition by the end of 2012."

My analysis

The stock has a bearish $69 price target from the Point and Figure chart. There have been 16 insider sell transactions and there have not been any insider buy transactions this year. The stock is trading at a P/E ratio of 13.26 and a forward P/E ratio of 12.56. The company has a book value of $24.79 per share and the stock has a 2.74% dividend yield. There is an opportunity for a short entry with the $69 target price and a stop loss at $85.

3. Caterpillar (NYSE:CAT) is the world's leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives. The company also is a leading services provider through Caterpillar Financial Services, Caterpillar Remanufacturing Services and Progress Rail Services.

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Insider sells

  • Jananne Copeland sold 3,700 shares on August 17. Jananne Copeland is Corporate Controller and Chief Accounting Officer of Caterpillar.
  • Richard Lavin sold 2,000 shares on August 1. Richard Lavin is group president and executive office member of Caterpillar.
  • Edward Rapp sold 13,500 shares on July 30. Edward Rapp is a group president and Chief Financial Officer of Caterpillar.

Financials

The company reported the third-quarter financial results on October 22 with the following highlights:

Revenue$16.4 billion
Net income$1.7 billion
Cash$5.7 billion

Outlook

The company expects 2012 sales and revenues to be about $66 billion and profit in a range of $9.00 to $9.25 per share. The previous outlook for sales and revenues was a range of $68 to $70 billion with profit of about $9.60 per share at the middle of the sales and revenues outlook range.

From an economic standpoint, the company is expecting slightly better world growth in 2013 with modest improvement in the United States, China and most of the developing world, but continuing difficulty in Europe. Based on the company's economic forecast, Caterpillar's preliminary outlook for 2013 is for sales and revenues to be about the same as 2012 in a range of up 5 percent to down 5 percent.

My analysis

The stock has a $116 price target from the Point and Figure chart. There have been 12 insider sell transactions and four insider buy transactions this year. The stock is trading at a P/E ratio of 9.38 and a forward P/E ratio of 8.41. The company has a book value of $24.37 per share and the stock has a 2.48% dividend yield. I am not interested in shorting the stock before the $116 price target is hit.

4. 3M (NYSE:MMM) is fundamentally a science based company. The company produces thousands of imaginative products, and is a leader in scores of markets - from health care and highway safety to office products and abrasives and adhesives. The company's success begins with its ability to apply its technologies - often in combination - to an endless array of real-world customer needs. Of course, all of this is made possible by the people of 3M and their singular commitment to make life easier and better for people around the world.

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Insider sells

  • Fred Palensky sold 26,522 shares on October 5 and 15,112 shares on August 20 pursuant to the reporting person's 10b5-1 trading plan dated May 3, 2012. Fred Palensky is Executive Vice President, Research and Development and Chief Technology Officer.
  • Brad Sauer sold 17,075 shares on August 16 pursuant to a Rule 10b5-1 trading plan dated May 8, 2012. Brad Sauer is Executive Vice President, Health Care Business.

Financials

The company reported the second-quarter financial results on July 26 with the following highlights:

Revenue$7.5 billion
Net income$1.2 billion
Cash$4.9 billion

Outlook

3M maintained its full-year 2012 earnings expectations of $6.35 to $6.50 per share. The company anticipates full-year organic local-currency sales growth of 2 to 5 percent and that foreign currency translation will reduce sales by approximately 3 percent for the year. 3M expects operating income margins in the range of 21.5 to 22.5 percent for the year.

My analysis

The stock has a $104 price target from the Point and Figure chart. There have been 29 insider sell transactions and there have not been any insider buy transactions since February 2012. The stock is trading at a P/E ratio of 15.19 and a forward P/E ratio of 13.43. The company has a book value of $23.73 per share and the stock has a 2.54% dividend yield. I am not interested in shorting the stock before the $104 price target is hit.

Source: 4 Conglomerates With Insider Selling During The Last 3 Months