Discover Financial: 6 Different Insiders Have Sold Shares This Year

In this article, I will feature one bank 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%.

Discover Financial Services (DFS) provides direct banking and payment services in the United States.

(click to enlarge)

Insider selling during the last 30 days

Here is a table of Discover'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
Roger Hochschild	COO	Jan 29	100,000	No	1,201,264 shares	7.7%
Diane Offereins	EVP	Jan 30	50,000	No	387,435 shares	11.4%
Steven Cunningham	SVP	Jan 28	15,000	No	48,576 shares	23.6%
James Panzarino	EVP	Jan 28	40,000	No	113,716 shares	26.0%
Carlos Minetti	EVP	Jan 28	82,231	No	343,749 shares	19.3%
Glenn Schneider	SVP	Jan 28	29,070	No	40,397 shares	41.8%

There have been 316,301 shares sold by insiders during the last 30 days.

Insider selling by calendar month

Here is a table of Discover's insider-trading activity by calendar month.

Month	Insider selling / shares	Insider buying / shares
January 2014	316,301	0
December 2013	0	0
November 2013	25,459	0
October 2013	155,610	0
September 2013	0	0
August 2013	234,799	0
July 2013	0	0
June 2013	0	0
May 2013	0	0
April 2013	153,930	0
March 2013	0	0
February 2013	0	0
January 2013	0	0

There have been 886,099 shares sold, and there have been zero shares purchased by insiders since January 2013. The month of January 2014 has seen the most insider selling.

Financials

Discover reported the full-year 2013 financial results on January 23 with the following highlights:

Competition

Discover's competitors include JPMorgan (JPM), Bank of America (BAC), and Citigroup (C). Here is a table comparing these companies.

Company	DFS	JPM	BAC	C
Market Cap:	25.48B	224.88B	178.95B	145.11B
Employees:	13,009	251,196	242,117	251,000
Qtrly Rev Growth (yoy):	0.05	0.00	0.28	0.04
Revenue:	8.17B	96.38B	85.39B	68.76B
Operating Margin:	0.48	0.28	0.20	0.29
Net Income:	2.41B	16.59B	10.08B	13.18B
EPS:	4.96	4.35	0.90	4.42
P/E:	10.82	12.82	18.58	10.80
PEG (5 yr expected):	1.14	1.60	0.61	0.49
P/S:	3.18	2.34	2.24	2.13

Discover 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
JPM	738,336	737,814
BAC	40,000	619,300
C	585	47,222

JPMorgan has also seen intensive insider selling during the last 30 days.

Conclusion

There have been six different insiders selling Discover, and there have not been any insiders buying Discover during the last 30 days. Five of these six insiders decreased their holdings by more than 10%. Discover has an insider ownership of 1.10%.

Before going short Discover, 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: Discover Financial: 6 Different Insiders Have Sold Shares This Year

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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