In this article, I will feature one healthcare 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%.
Allergan (NYSE:AGN) operates as a multi-specialty healthcare company primarily in the United States, Europe, Latin America, and the Asia Pacific.
Insider selling during the last 30 days
Here is a table of Allergan's insider activity during the last 30 days.
|Name||Title||Trade Date||Shares Sold||Rule 10b5-1||Current Ownership||Decrease In Ownership|
|Dawn Hudson||Director||Feb 19||4,200||No||11,600 shares||26.6%|
|Jeffrey Edwards||CFO||Feb 7-19||144,400||No||20,259 shares||87.7%|
|Raymond Diradoorian||EVP||Feb 11-19||40,000||No||17,912 shares + 23,000 options||49.4%|
|Scott Sherman||EVP||Feb 7-18||14,501||No||9,478 shares + 30,000 options||26.9%|
|Douglas Ingram||President||Feb 14||84,000||No||30,101 shares||73.6%|
|Louis Lavigne||Director||Feb 11||54,600||No||22,923 shares||70.4%|
|James Barlow||SVP||Feb 12||23,875||No||9,289 shares + 26,050 options||40.3%|
|David Pyott||CEO||Feb 12||252,000||No||399,168 shares||38.7%|
There have been 617,576 shares sold by insiders during the last 30 days.
Insider selling by calendar month
Here is a table of Allergan's insider activity by calendar month.
|Month||Insider selling / shares||Insider buying / shares|
There have been 1,073,676 shares sold, and there have been zero shares purchased by insiders since January 2013. The month of February 2014 has seen the most insider selling.
Allergan reported the full-year 2013 financial results on February 5 with the following highlights:
|Net income||$985.1 million|
Allergan's guidance is as follows:
|Total product net sales||$1,525-$1,600 million||$6,650-$6,950 million|
Pipeline and upcoming milestones
Allergan's pipeline consists of the following product candidates.
|Qtrly Rev Growth (yoy):||0.12||0.05||0.02|
|PEG (5 yr expected):||1.78||2.68||2.90|
Allergan has the highest P/S ratio among these three companies.
Here is a table of these competitors' insider activities during the last 12 months.
|Company||Insider buying / shares||Insider selling / shares|
Only Allergan has seen intensive insider selling during the last 30 days.
There have been eight different insiders selling Allergan, and there have not been any insiders buying Allergan during the last 30 days. All eight of these insiders decreased their holdings by more than 10%. Allergan has an insider ownership of 0.10%.
Before going short Allergan, 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.