3 Stocks With Recent Intensive Insider Selling

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Includes: LLTC, WDC, WIFI
by: Markus Aarnio

There was intensive insider selling in Boingo Wireless (NASDAQ:WIFI) in March 2012. The stock peaked at $13.25 on March 29, 2012 and is currently trading 39.5% below those highs.

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With this episode in mind, I screened for stocks which have seen recent intensive insider selling. 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%.

In this article, I will feature three stocks that met these three criteria of intensive insider selling in the last 30 days.

1. Boingo Wireless provides mobile Wi-Fi Internet solutions.

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Insider selling by insider (last 30 days)

  • Peter Hovenier sold 10,000 shares on February 14 pursuant to a Rule 10b5-1 trading plan. Peter Hovenier currently holds 75,783 options or 0.2% of the company. Peter Hovenier is Chief Financial Officer of the company.
  • Mitsui & Co Ltd (OTCPK:MITSY) sold 49,467 shares on January 22 - February 12 and currently controls 4,456,990 shares or 12.7% of the company.
  • David Hagan sold 15,000 shares on February 12 pursuant to a Rule 10b5-1 trading plan. David Hagan currently holds 122,913 options or 0.3% of the company. David Hagan is President and Chief Executive Officer of the company.

Insider selling by calendar month

Here is a table of Boingo Wireless' insider trading activity by calendar month.

Month Insider selling / shares Insider buying / shares
February 2013 47,307 0
January 2013 89,750 0
December 2012 403,978 0
November 2012 25,197 0
October 2012 0 0
September 2012 198,962 0
August 2012 75,643 0
July 2012 959 0
June 2012 44,235 0
May 2012 94,994 0
April 2012 518,686 0
March 2012 426,533 0
February 2012 100,297 0
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There have been 2,026,541 shares sold and zero shares purchased during the past 12 months.

Financials

The company reported the third-quarter financial results on November 8, with the following highlights:

Revenue $26.0 million
Net income $2.8 million
Cash $94.6 million
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Outlook

Boingo Wireless' guidance for the full year ending December 31, 2012, is as follows:

  • Revenue is expected to be in the range of $101.0 million to $103.0 million.
  • Adjusted EBITDA is expected to be in the range of $30.5 million to $32.5 million.
  • Net income attributable to common stockholders is expected to be in the range of $7.5 million to $8.5 million, or $0.21 to $0.23 per diluted share.

Competition

Boingo Wireless' competitors include iPass (NASDAQ:IPAS) and LodgeNet Interactive Corporation (OTC:LNET). Here is a table comparing these companies.

Company WIFI IPAS LNET Industry Average (Information Technology Services)
Market Cap: 282.05M 133.81M 544.67K 282.05M
Employees: 149 N/A 963 2.00K
Qtrly Rev Growth (yoy): 0.05 -0.14 -0.15 0.08
Revenue: 100.40M 126.08M 378.76M 494.92M
Gross Margin: 0.47 0.41 0.32 0.29
EBITDA: 30.23M -1.17M 75.27M 27.96M
Operating Margin: 0.14 -0.03 0.04 0.06
Net Income: 7.75M -4.38M -110.29M N/A
EPS: 0.21 -0.07 -4.37 0.22
P/E: 37.48 N/A N/A 12.50
PEG (5 yr expected): 2.69 -9.00 N/A 1.11
P/S: 2.80 1.10 N/A 0.66
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Boingo Wireless is trading above the industry average P/S ratio, which could explain some of the insider selling.

My analysis

The stock is currently trading below the 200-day moving average. There have been eight insider sell transactions and there have not been any insider buy transactions during the last 30 days. The stock is trading at a P/E ratio of 37.48 and a forward P/E ratio of 25.87. The company has a book value of $4.05 per share. I believe there is an opportunity for a short entry with a $4 price target, which is the book value. I would place a stop loss at $12, which is the six-month high. The two main reason for the proposed short entry are relatively high P/S ratio and the intensive insider selling activity.

2. Linear Technology Corporation (NASDAQ:LLTC) designs, manufactures, and markets various analog integrated circuits [ICs] worldwide.

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Insider selling by insider (last 30 days)

  • Paul Chantalat sold 20,000 shares on February 15 and currently holds 61,979 shares or less than 0.1% of the company. Paul Chantalat is Vice President, Quality and Reliability.
  • Alexander McCann sold 62,000 shares on February 15 and currently holds 101,942 shares or less than 0.1% of the company. Alexander McCann is Vice President and Chief Operating Officer.
  • Robert Dobkin sold 40,000 shares on January 24 - February 15 and currently controls 666,713 shares or 0.3% of the company. Robert Dobkin is Vice President Engineering and Chief Technology Officer.
  • Richard Moley sold 20,000 shares on February 14 and currently holds 15,000 shares or less than 0.1% of the company. Richard Moley serves as a director of the company.
  • Steve Pietkiewicz sold 2,185 shares on February 13 and currently controls 77,861 shares or less than 0.1% of the company. Steve Pietkiewicz is Vice President and General Manager, Power Business Unit.
  • David Quarles sold 31,000 shares on January 31 - February 13 and currently holds 49,619 shares or less than 0.1% of the company. David Quarles is Vice President, International Sales.
  • Robert Reay sold 25,000 shares on February 12 and currently holds 86,145 shares or less than 0.1% of the company. Robert Reay is Vice President & General Manager Mixed Signal Unit.
  • Donald Paulus sold 35,000 shares on February 11 and currently holds 70,888 shares or less than 0.1% of the company. Donald Paulus is Vice President & General Manager of Power Business Unit.
  • Richard Nickson sold 20,000 shares on February 8 and currently holds 67,348 shares or less than 0.1% of the company. Richard Nickson is Vice President, North American Sales.
  • Lothar Maier sold 150,000 shares on February 6 and currently holds 370,555 shares or 0.2% of the company. Lothar Maier is Chief Executive Officer.
  • Robert Swanson sold 20,174 shares on January 18 - February 4 and currently controls 399,197 shares or 0.2% of the company. Robert Swanson is Executive Chairman.
  • David Lee sold 40,000 shares on February 1 and currently holds 15,000 shares or less than 0.1% of the company. David Lee serves as a director of the company.
  • Paul Coghlan sold 15,000 shares on January 28 - February 1 and currently holds 462,097 shares or 0.2% of the company. Paul Coghlan is Vice President of Finance and Chief Financial Officer.

Insider selling by calendar month

Here is a table of Linear Technology's insider trading activity by calendar month.

Month Insider selling / shares Insider buying / shares
February 2013 432,561 0
January 2013 47,798 0
December 2012 0 0
November 2012 202,008 0
October 2012 40,000 0
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February 2013 has been the highest insider selling month during the past five months.

Financials

The company reported the fiscal 2013 second-quarter, which ended December 30, 2012, financial results on January 15, with the following highlights:

Revenue $305.3 million
Net income $88.8 million
Cash $1.3 billion
Debt $816.0 million
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Outlook

Based upon the company's current bookings rate, and assuming business confidence improves, the company expects to resume moderate revenue growth. The company currently estimates that fiscal third quarter revenues will grow in the range of 1% to 4% over the second quarter.

Competition

Linear Technology's competitors include Analog Devices (NYSE:ADI), Maxim Integrated Products (NASDAQ:MXIM) and Texas Instruments (NYSE:TXN). Here is a table comparing these companies.

Company LLTC ADI MXIM TXN Industry Average (Semiconductor - Specialized)
Market Cap: 8.82B 13.92B 9.44B 37.22B 222.41M
Employees: 4,365 9,200 9,065 N/A 691.00
Qtrly Rev Growth (yoy): 0.04 -0.03 0.02 -0.13 0.20
Revenue: 1.28B 2.70B 2.40B 12.82B 300.31M
Gross Margin: 0.75 0.64 0.61 0.50 0.36
EBITDA: 636.19M 942.56M 796.78M 4.01B 12.88M
Operating Margin: 0.45 0.31 0.24 0.21 -0.03
Net Income: 395.84M 651.24M 337.85M 1.73B N/A
EPS: 1.68 2.13 1.23 1.51 N/A
P/E: 22.58 21.68 26.32 22.24 20.31
PEG (5 yr expected): 2.30 6.57 1.59 2.18 0.91
P/S: 6.86 5.19 3.98 2.92 1.41
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Linear Technology is trading above the industry average P/S ratio, which could explain some of the insider selling.

My analysis

There have been 18 insider sell transactions and there have not been any insider buy transactions during the last 30 days. There are six analyst buy ratings, six neutral ratings and four sell ratings, with an average target price of $34.27. The stock is trading at a P/E ratio of 22.58 and a forward P/E ratio of 19.06. The company has a book value of $3.42 per share and the stock has a 2.74% dividend yield. Before entering short this stock, I would like to get a bearish confirmation from the Point and Figure chart. The four main reasons for the proposed short entry are slow revenue growth, high P/S ratio, bearish analyst target prices and the intensive insider selling activity.

3. Western Digital Corporation (NYSE:WDC) engages in the development, manufacture, and sale of storage products that enable people to create, manage, experience and preserve digital content.

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Insider selling by insider (last 30 days)

  • Michael Lambert sold 21,685 shares on February 14 and currently holds 25,093 shares or less than 0.1% of the company. Michael Lambert serves as a director of the company.
  • Kathleen Cote sold 29,243 shares on February 14 and currently holds 15,093 shares or less than 0.1% of the company. Kathleen Cote serves as a director of the company.
  • Arif Shakeel sold 53,490 shares on January 28 - February 12 and currently holds 18,359 shares or less than 0.1% of the company. Arif Shakeel serves as a director of the company.
  • Henry Denero sold 2,500 shares on January 28 and currently holds 44,660 shares or less than 0.1% of the company. Henry Denero serves as a director of the company.

Insider selling by calendar month

Here is a table of Western Digital's insider trading activity by calendar month.

Month Insider selling / shares Insider buying / shares
February 2013 64,863 0
January 2013 42,055 0
December 2012 293,718 0
November 2012 0 0
October 2012 0 0
September 2012 7,876 0
August 2012 78,696 0
July 2012 32,121 0
June 2012 804 0
May 2012 30,732 0
April 2012 0 0
March 2012 187,128 0
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There have been 737,993 shares sold and zero shares purchased during the past 11 months.

Financials

The company reported the fiscal 2013 second-quarter, which ended December 28, 2012, financial results on January 23, with the following highlights:

Revenue $3.8 billion
Net income $335 million
Cash $3.8 billion
Debt $2.1 billion
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Competition

Western Digital's competitors include EMC Corporation (EMC), Seagate Technology (NASDAQ:STX) and Toshiba (OTCPK:TOSBF). Here is a table comparing these companies.

Company WDC EMC STX TOSBF Industry Average (Data Storage Devices)
Market Cap: 11.69B 50.57B 12.36B 18.42B 184.83M
Employees: 103,111 N/A 57,900 209,784 1.06K
Qtrly Rev Growth (yoy): 0.92 0.08 0.15 N/A 0.19
Revenue: 15.65B 21.71B 16.33B 73.57B 405.60M
Gross Margin: 0.30 0.63 0.32 0.25 0.25
EBITDA: 3.79B 5.58B 4.34B 5.63B 14.98M
Operating Margin: 0.17 0.19 0.21 0.04 -0.02
Net Income: 2.08B 2.73B 3.23B 1.48B N/A
EPS: 8.30 1.23 7.70 0.35 N/A
P/E: 5.86 19.51 4.47 12.46 16.45
PEG (5 yr expected): 4.07 1.01 -0.84 N/A 0.51
P/S: 0.75 2.33 0.77 0.26 0.76
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Western Digital's P/S ratio is in line with the industry average.

My analysis

There have been five insider sell transactions and there have not been any insider buy transactions during the last 30 days. There are seven analyst buy ratings, 13 neutral ratings and two sell ratings, with an average target price of $46.04. The stock is trading at a P/E ratio of 5.86 and a forward P/E ratio of 6.14. The company has a book value of $34.21 per share and the stock has a 2.06% dividend yield. Before entering short this stock, I would like to get a bearish confirmation from the Point and Figure chart. The two main reasons for the proposed short entry are bearish analyst target prices and the intensive insider selling activity.

Disclosure: I have no positions in any stocks mentioned, but may initiate a short position in WIFI over 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.