C. R. Bard: 5 Different Insiders Have Sold Shares During The Last 30 Days

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:

1. The stock was sold by three or more insiders within one month.


2. The stock was not purchased by any insiders in the month of intensive selling.


3. At least two sellers decreased their holdings by more than 10%.

C. R. Bard (BCR) designs, manufactures, packages, distributes, and sells medical, surgical, diagnostic, and patient care devices worldwide.

(click to enlarge)

Insider selling during the last 30 days

Here is a table of C. R. Bard'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
Timothy Ring	CEO	Dec 2-23	34,167	Yes	196,242 shares	14.8%
Jim Beasley	Group President	Dec 12-16	33,428	Yes	42,569 shares + 17,312 options	35.8%
Timothy Collins	Group President	Dec 16	3,347	Yes	48,790 shares	6.4%
John Deford	SVP	Dec 12	2,792	Yes	33,555 shares + 16,643 options	5.3%
John Weiland	COO	Dec 10	10,389	Yes	129,567 shares	7.4%

There have been 84,123 shares sold by insiders during the last 30 days. All these shares were sold pursuant to a Rule 10b5-1 plan.

SEC Rule 10b5-1 is a regulation enacted by the United States Securities and Exchange Commission (SEC) in 2000. The SEC states that Rule 10b5-1 was enacted in order to resolve an unsettled issue over the definition of insider trading, which is prohibited by SEC Rule 10b-5. After Rule 10b5-1 was enacted, the SEC staff publicly took the position that canceling a planned trade made under the safe harbor does not constitute insider trading, even if the person was aware of the inside information when canceling the trade. This staff interpretation raises the possibility that executives can exploit this safe harbor by entering into 10b5-1 trading plans before they have inside information while retaining the option to later cancel those plans based on inside information.

For example, a CEO of a company could call a broker on January 1 and enter into a plan to sell a particular quantity of shares of his company's stock on March 1, find out terrible news about his company on February 1 that will not become public until April 1, and then go forward with the March 1 sale anyway, saving himself from losing money when the bad news becomes public. Under the terms of Rule 10b5-1(b) this is insider trading because the CEO "was aware" of the inside information when he made the trade. But he can assert an affirmative defense under Rule 10b5-1(c), because he planned the trade before he learned the inside information.

In general, it is a safer way for an insider to sell shares pursuant to a Rule 10b5-1 trading plan than without it.

Insider selling by calendar month

Here is a table of C. R. Bard's insider-trading activity by calendar month.

Month	Insider selling / shares	Insider buying / shares
December 2013	84,123	0
November 2013	22,960	0
October 2013	262,455	0
September 2013	46,908	0
August 2013	62,812	0
July 2013	159,965	0
June 2013	22,881	0
May 2013	19,024	0
April 2013	763,240	0
March 2013	685,248	0
February 2013	22,061	0
January 2013	3,314	0

There have been 2,154,991 shares sold, and there have been zero shares purchased by insiders this year.

Financials

C. R. Bard reported the third-quarter financial results on October 22 with the following highlights:

Revenue	$758.0 million
Net income	$93.2 million
Cash	$781.7 million
Debt	$1.5 billion

Outlook

C. R. Bard's guidance is as follows:

	Q4/2013	FY2013
Sales growth	1-3%	2-5%
Adjusted EPS	$1.34-$1.39	$5.70-$5.75

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(Source: November presentation)

Competition

C. R. Bard's competitors include Boston Scientific (BSX), and Johnson & Johnson (JNJ). Here is a table comparing these companies.

Company BCR BSX JNJ Industry Average (Medical Instruments & Supplies) Market Cap: 10.43B 16.05B 258.42B 2.17B Employees: 12,200 24,000 127,600 3.90K Qtrly Rev Growth (yoy): 0.04 0.00 0.03 0.07 Revenue: 3.00B 7.13B 70.52B 952.63M Gross Margin: 0.62 0.67 0.69 0.62 EBITDA: 831.30M 1.62B 22.69B 170.60M Operating Margin: 0.23 0.13 0.26 0.17 Net Income: 147.90M -168.00M 12.88B N/A EPS: 1.81 -0.12 4.48 1.70 P/E: 73.92 N/A 20.43 42.57 PEG (5 yr expected): 2.23 N/A 2.65 N/A P/S: 3.48 2.25 3.66 2.28

C. R. Bard has the second-highest P/S ratio among these three companies.

Here is a table of these competitors' insider-trading activities this year.

Company	Insider buying / shares	Insider selling / shares
BSX	30,000	1,591,833
JNJ	0	113,709

Only C. R. Bard has seen intensive insider selling during the last 30 days.

Conclusion

There have been five different insiders selling C. R. Bard, and there have not been any insiders buying C. R. Bard during the last 30 days. Two of these five insiders decreased their holdings by more than 10%. C. R. Bard has an insider ownership of 0.90%.

Before entering short C. R. Bard, 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.

Source: C. R. Bard: 5 Different Insiders Have Sold Shares During The Last 30 Days

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. (More...)

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