10 Stocks With Insanely High PE Ratios Insiders Are Selling

by: Insider Monkey

Investors usually like stocks with low PE ratios as these stocks are more likely to be trading at a discount compared with other stocks in the market. In contrast, stocks with high PE ratios are relatively overvalued by the market and are more likely to underperform. Additionally, corporate insiders know their companies and the industry much better than almost all other investors. When they sell the stocks of their company, this may be because of their belief that the stock is overvalued. This is more likely for a stock with high PE ratio. For instance OpenTable (NASDAQ:OPEN) insider Thomas Layton sold nearly 700K shares at around $90 per share during the first five months of the year. He netted more than $60 million from these sales. He stopped selling holdings after OPEN plunged. Currently the stock is trading at around $38. Netflix (NASDAQ:NFLX) insiders have been selling their holdings as well. Reed Hastings had been selling 5000 shares every week until the beginning of October. His average price was over $200 per share. He stopped selling his shares after NFLX lost more than 50% of its value.

Below we compiled a list of 10 stocks with the highest PE ratios insiders are currently selling. All companies have at least $2 billion market cap and were sold by at least one insider during the past month.








LinkedIn Corporation



Qlik Technologies, Inc.






Dunkin' Brands Group, Inc.



Weingarten Realty Investors



Nuance Communications, Inc.



Fusion-io, Inc.



Allied Nevada Gold Corp.



Post Properties Inc.


Salesforce.com provides enterprise cloud computing applications. Seven insiders sold the stock during the past month. The most recent insider sale happened on December 1, when Craig Conway sold 750 shares at $115.65. Another director of the company, Stratton Sclavos, also sold 750 shares at $116.0015 on November 30, and another 750 shares at $110.92 on November 29. Parker Harris, Hilarie Koplow, George Hu, Frank Veenendaal Van, and Graham Smith also sold CRM in November. The stock is now trading at $126.88. It has a market cap of $16.3B and a P/E ratio of 5982. Jim Simons’ Renaissance Technologies also sold out its stakes in CRM during the third quarter.

Linkedin Corporation is a professional internet network. Ten insiders sold LNKD over the past month. For example, as the large shareholder at Linkedin, Vi Deer & Co Llc sold more than 1 million shares at $68.941 on November 22. On the same day, Michael Gamson, Gipchand Nishar, Steven Sordello, Erika Rottenberg, Jeff Weiner, David Sze, David Henke, Kent Buller, and Greylock Xi Limited Partnership also sold the stock. Now LNKD is trading at $69.62. It has a market cap of $6.6B and a P/E ratio of 1357.8. Paul Tudor Jones’ Tudor Investment Corp sold out its stakes in LNKD in the third quarter.

Qlik Technologies Inc. sells software solutions. The stock was sold by six insiders during the past month. Leslie Bonney, COO at the company, sold 25,000 shares at around $29 on November 18. Prior to that, Erel Margalit sold 500,000 shares at $29.88 on November 15. Lars Bjork, John Burris, Alexander Ott, and Paul Wahl also sold their holdings in November. Now QLIK is trading at $30.39. It has a market cap of $2.4B and a P/E ratio of 411.14.

Cepheid is a molecular diagnostics company. It was sold by one insider over the past month. On November 25, Thomas Gutshall sold 3,000 shares at $31.6575. Now CPHD is trading at $35.22. It has a market cap of $2.2B and a P/E ratio of 383.89.

Dunkin' Brands Group Inc. is a franchisor of quick service restaurants. DNKN was sold by 12 insiders during the past month. All sales happened on November 22. TCG Holdings Llc, the large shareholder at Dunkin, sold 7,104,580 shares at $24.72. John Dawson, Karen Raskopf, Daniel Sheehan, Nigel Travis, Jon Luther, Bain Capital Investors Llc, Mark Nunnelly, Anthony Dinovi, Todd Abbrecht, Thomas Lee Advisors Llc, and Andrew Balson also sold the stock at around $24.7 on that day (see the details of insider sales of DNKN here). Now DNKN is trading at $25.14. It has a market cap of $3.0B and a P/E ratio of 353.57.

Other high PE ratio stocks with insider sales in the past month include Weingarten Realty Investors (NYSE:WRI), Nuance Communications Inc (NASDAQ:NUAN), Fusion-io Inc (NYSE:FIO), Allied Nevada Gold Corp (NYSEMKT:ANV), and Post Properties Inc (NYSE:PPS). Insider sales don’t always imply negative views by insiders. However, in certain cases it might. We urge investors to be cautious about investing in stocks with high PE ratios and abnormal levels of insider sales.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.