Allergan: 8 Different Insiders Have Sold Shares This Month

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%.

Allergan (AGN) operates as a multi-specialty healthcare company primarily in the United States, Europe, Latin America, and the Asia Pacific.

(click to enlarge)

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
February 2014	617,576	0
January 2014	108,200	0
December 2013	85,500	0
November 2013	3,000	0
October 2013	2,000	0
September 2013	2,000	0
August 2013	71,200	0
July 2013	2,000	0
June 2013	2,000	0
May 2013	86,000	0
April 2013	35,200	0
March 2013	25,300	0
February 2013	2,000	0
January 2013	31,700	0

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.

Financials

Allergan reported the full-year 2013 financial results on February 5 with the following highlights:

Revenue	$6.3 billion
Net income	$985.1 million
Cash	$3.6 billion
Debt	$2.2 billion

Outlook

Allergan's guidance is as follows:

	Q1/2014	FY2014
Total product net sales	$1,525-$1,600 million	$6,650-$6,950 million
Non-GAAP EPS	$1.09-$1.12	$5.36-$5.48

Pipeline and upcoming milestones

Allergan's pipeline consists of the following product candidates.

(Source: Allergan)

Competition

Allergan's competitors include Johnson & Johnson (JNJ), and Novartis AG (NVS). Here is a table comparing these companies.

Company	AGN	JNJ	NVS
Market Cap:	37.12B	258.22B	200.52B
Employees:	11,400	128,000	135,696
Qtrly Rev Growth (yoy):	0.12	0.05	0.02
Revenue:	6.30B	71.31B	58.83B
Gross Margin:	0.88	0.69	0.67
EBITDA:	2.12B	22.96B	16.20B
Operating Margin:	0.31	0.27	0.19
Net Income:	985.10M	13.83B	9.18B
EPS:	3.26	4.81	3.70
P/E:	38.37	19.04	22.34
PEG (5 yr expected):	1.78	2.68	2.90
P/S:	5.99	3.63	3.39

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
JNJ	0	113,709
NVS	N/A	N/A

Only Allergan has seen intensive insider selling during the last 30 days.

Conclusion

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.

Source: Allergan: 8 Different Insiders Have Sold Shares This Month

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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