In this article, I will feature one agricultural 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%.
Monsanto Company (MON) provides agricultural products for farmers worldwide.
Insider selling during the last 30 days
Here is a table of Monsanto's insider-trading activity during the last 30 days by insider.
| Name | Title | Trade Date | Shares Sold | Rule 10b5-1 | Current Ownership | Decrease In Ownership |
| Hugh Grant | CEO | Jan 17 | 44,179 | No | 475,507 shares | 8.5% |
| Robert Fraley | CTO | Jan 16 | 64,850 | No | 118,039 shares + 24,740 options | 31.2% |
| Steven Mizell | EVP | Jan 14 | 24,000 | No | 37,189 shares + 23,267 options | 28.4% |
| Tom Hartley | VP | Jan 14 | 10,000 | Yes | 15,515 shares + 7,900 options | 29.9% |
There have been 143,029 shares sold by insiders during the last 30 days. Tom Hartley 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 Monsanto's insider-trading activity by calendar month.
| Month | Insider selling / shares | Insider buying / shares |
| January 2014 | 143,029 | 0 |
| December 2013 | 0 | 0 |
| November 2013 | 13,560 | 0 |
| October 2013 | 20,730 | 0 |
| September 2013 | 5,276 | 0 |
| August 2013 | 0 | 0 |
| July 2013 | 106,073 | 0 |
| June 2013 | 0 | 0 |
| May 2013 | 112,086 | 0 |
| April 2013 | 411,899 | 0 |
| March 2013 | 0 | 0 |
| February 2013 | 0 | 0 |
| January 2013 | 139,637 | 0 |
There have been 952,290 shares sold, and there have been zero shares purchased by insiders since January 2013.
Financials
Monsanto reported the fiscal 2014 first-quarter, which ended November 30, financial results on January 8 with the following highlights:
| Revenue | $3.1 billion |
| Net income | $368 million |
| Cash | $4.7 billion |
| Debt | $3.3 billion |
(Source: Earnings presentation)
Outlook
Monsanto's fiscal 2014 guidance is as follows:
| EPS | $5.00-$5.20 |
| Free cash flow | $600-$800 million |
(Source: Earnings presentation)
Competition
Monsanto's competitors include BASF SE (OTCQX:BASFY), DuPont (DD), and Syngenta (SYT). Here is a table comparing these companies.
| Company | MON | BASFY | DD | SYT | Industry Average (Agricultural Chemicals) |
|---|---|---|---|---|---|
| Market Cap: | 57.98B | 99.89B | 58.46B | 35.93B | 1.86B |
| Employees: | 21,900 | 112,617 | 70,000 | 27,000 | 1.07K |
| Qtrly Rev Growth (yoy): | 0.07 | 0.02 | 0.05 | 0.02 | 0.17 |
| Revenue: | 15.06B | 95.56B | 35.55B | 14.33B | 3.84B |
| Gross Margin: | 0.52 | 0.25 | 0.28 | 0.48 | 0.28 |
| EBITDA: | 4.25B | 12.75B | 5.58B | 2.95B | 297.77M |
| Operating Margin: | 0.24 | 0.09 | 0.11 | 0.17 | 0.08 |
| Net Income: | 2.50B | 6.06B | 2.68B | 1.79B | N/A |
| EPS: | 4.66 | 6.60 | 5.12 | 3.88 | 2.25 |
| P/E: | 23.75 | 16.48 | 12.30 | 20.13 | 11.67 |
| PEG (5 yr expected): | 1.54 | 8.54 | 2.14 | N/A | 1.63 |
| P/S: | 3.95 | 1.05 | 1.66 | 2.51 | 0.64 |
Monsanto has the highest P/S ratio among these four companies.
Here is a table of these competitors' insider-trading activities during the last 12 months.
| Company | Insider buying / shares | Insider selling / shares |
| BASFY | N/A | N/A |
| DD | 0 | 1,084,843 |
| SYT | N/A | N/A |
Only Monsanto has seen intensive insider selling during the last 30 days.
Conclusion
There have been four different insiders selling Monsanto, and there have not been any insiders buying Monsanto during the last 30 days. Three of these four insiders decreased their holdings by more than 10%. Monsanto has an insider ownership of 0.30%.
Before going short Monsanto, 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.
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.
