Seeking Alpha
Long/short equity, insider ownership
Profile| Send Message|
( followers)  

The technology sector has been the worst performing group over the recent six month period with a gain of just 2.5%.

(click to enlarge)

For this article, I screened for technology 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 technology sector stocks that met these three criteria of intensive insider selling in the last 30 days.

1. Uni-Pixel (NASDAQ:UNXL) delivers performance engineered films to the display, touch screen, and flexible electronics market segments.

(click to enlarge)

Insider selling by insider (last 30 days)

  • Ross Young sold 14,000 shares on March 1-4 and currently holds 2,000 shares or less than 0.1% of the company. Ross Young serves as a director of the company.
  • Jeffrey Tomz sold 40,000 shares on March 1 and currently holds 21,114 shares or 0.2% of the company. Jeffrey Tomz is Chief Financial Officer of the company.
  • Seong Shin sold 25,000 shares on March 1 and currently holds 10,000 shares or 0.1% of the company. Seong Shin is Chief Operating Officer of the company.
  • Daniel Van Ostrand sold 40,000 shares on March 1 and currently holds 61,167 shares or 0.6% of the company. Daniel Van Ostrand is Senior Vice President Engineering & R&D.
  • Robert Petcavich sold 50,000 shares on March 1 and currently holds 26,000 shares or 0.3% of the company. Robert Petcavich is Senior Vice President, Chief Technology Officer.
  • Reed Killion sold 50,000 shares on March 1 and currently holds 44,667 shares or 0.4% of the company. Reed Killion is President & CEO of the company.
  • Bruce Berkoff sold 10,000 shares on March 1 and currently holds 6,000 shares or less than 0.1% of the company. Bruce Berkoff serves as a director of the company.

Insider selling by calendar month

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

MonthInsider selling / sharesInsider buying / shares
March 2013229,0000
February 201300
January 201300
December 201200
November 20121,5000
October 201200
September 201200
August 20121,037,0804,000
July 201200
June 201200
May 201200
April 201200
March 201200
February 201200

The month of March 2013 has seen the most insider selling since August 2012.

Financials

The company reported the full year 2012 financial results on February 26 with the following highlights:

Revenue$76,154
Net loss$9.0 million
Cash$13.0 million

Outlook

Reed Killion, CEO of UniPixel, commented on February 26:

"Given our strong progress, we expect to recognize approximately $5 million in revenue in the current first quarter. We are planning to begin limited production in the second quarter and ramp up to volume production in the third. We are targeting 60,000 units or square feet per month by the end of April, 200,000 by the end of June, 700,000 by the end of September and then achieving 1.3 million units monthly by January of 2014."

My analysis

The stock has met its $22 price target from the Point and Figure chart. There have been eight insider sell transactions and there have not been any insider buy transactions during the last 30 days. Before entering short this stock, I would like to get a bearish confirmation from the Point and Figure chart. The three main reasons for the proposed short entry are negative earnings, high P/S ratio and the intensive insider selling activity.

2. Equinix (NASDAQ:EQIX) provides data center services to protect and connect the information assets for the enterprises, financial services companies, and content and network providers primarily in the Americas, Europe, the Middle East, Africa, and the Asia-Pacific.

(click to enlarge)

Insider selling by insider (last 30 days)

  • Sara Baack sold 2,500 shares on March 4 pursuant to a Rule 10b5-1 Trading Plan. Sara Baack currently holds 7,500 options or less than 0.1% of the company. Sara Baack joined Equinix in 2012 as Chief Marketing Officer.
  • Christopher Paisley sold 1,500 shares on February 21 pursuant to a Rule 10b5-1 Trading Plan. Christopher Paisley currently holds 11,524 shares or less than 0.1% of the company. Christopher Paisley serves as a director of the company.
  • Stephen Smith sold 33,078 shares on February 19-20 pursuant to a Rule 10b5-1 Trading Plan. Stephen Smith currently holds 39,040 shares or less than 0.1% of the company. Stephen Smith is CEO & President of the company.
  • Peter Van Camp sold 2,345 shares on February 19 pursuant to a Rule 10b5-1 Trading Plan. Peter Van Camp currently holds 9,444 shares or less than 0.1% of the company. Peter Van Camp serves as a director of the company.
  • Keith Taylor sold 9,274 shares on February 19 pursuant to a Rule 10b5-1 Trading Plan. Keith Taylor currently holds 60,391 shares or 0.1% of the company. Keith Taylor is Chief Financial Officer of the company.
  • Charles Meyers sold 7,690 shares on February 19 pursuant to a Rule 10b5-1 Trading Plan. Charles Meyers currently holds 538 shares or less than 0.1% of the company. Charles Meyers is President, Equinix Americas.
  • Peter Ferris sold 4,178 shares on February 19 pursuant to a Rule 10b5-1 Trading Plan. Peter Ferris currently holds 15,354 shares or less than 0.1% of the company. Peter Ferris is Chief Sales Officer of the company.

Insider selling by calendar month

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

MonthInsider selling / sharesInsider buying / shares
March 20132,5000
February 201359,0650
January 20135,9680
December 20121,0000
November 201224,7090
October 20127,0000
September 20126,7400
August 201213,2660
July 20128,7170
June 20127,0000
May 201263,2000
April 201200
March 201200
February 201200

There have been 199,165 shares sold and zero shares purchased since February 2012.

Financials

The company reported the full year 2012 financial results on February 13 with the following highlights:

Revenue$1.9 billion
Net income$144.7 million
Cash$546.5 million
Debt$3.0 billion

Outlook

For the first quarter of 2013, the company expects revenues to be in the range of $518 million to $522 million. Cash gross profit margin is expected to range between 68% and 69%. Cash selling, general and administrative expenses are expected to range between $116 million and $120 million. Adjusted EBITDA is expected to be between $236 million and $240 million. Capital expenditures are expected to range between $140 million to $160 million, comprised of approximately $40 million of ongoing capital expenditures and $100 million to $120 million of expansion capital expenditures.

For the full year of 2013, total revenues are expected to be greater than $2,200 million. Total year cash gross margins are expected to range between 68% and 69%. Cash selling, general and administrative expenses are expected to range between $490 million and $510 million. Adjusted EBITDA for the year is expected to be greater than $1,010 million. Capital expenditures for 2013 are expected to be in the range of $550 million to $650 million, comprised of approximately $165 million of ongoing capital expenditures and $385 million to $485 million for expansion capital expenditures.

Competition

Equinix's competitors include AT&T (NYSE:T). Here is a table comparing these two companies.

CompanyEQIXTIndustry Average (Internet Software & Services)
Market Cap:10.59B200.14B8.05B
Employees:N/A241,81071.00K
Qtrly Rev Growth (yoy):0.140.000.20
Revenue:1.90B127.43B6.39B
Gross Margin:0.500.570.23
EBITDA:820.71M29.01B891.90M
Operating Margin:0.220.100.08
Net Income:131.58M7.26BN/A
EPS:2.921.250.16
P/E:74.2229.16160.06
PEG (5 yr expected):2.792.641.33
P/S:5.601.581.26

Equinix is trading above the industry average P/S ratio, which could explain some of the insider selling.

My analysis

The stock has a $184 price target from the Point and Figure chart. There have been eight insider sell transactions and there have not been any insider buy transactions during the last 30 days. There are 11 analyst buy ratings, eight neutral ratings and zero sell ratings, with an average target price of $197.60. The stock is trading at a P/E ratio of 74.22 and a forward P/E ratio of 41.97. The company has a book value of $48.02 per share. I believe there is an opportunity for a short entry with the $184 price target from the Point and Figure chart. I would place a stop loss at $235, which is the all time high. The four main reasons for the proposed short entry are bearish analyst target prices, high P/E ratio, bearish Point and Figure chart and the intensive insider selling activity.

3. ValueClick (VCLK) offers a suite of products and services that enable marketers to advertise and sell their products and services primarily through online and mobile display advertising, affiliate marketing, and comparison shopping channels.

(click to enlarge)

Insider selling by insider (last 30 days)

  • John Giuliani sold 17,161 shares on February 22 - March 1 and currently holds 2,646,420 shares or 3.4% of the company. John Giuliani is President, Chief Executive Officer and Director of the company.
  • James Peters sold 3,500 shares on February 22 and currently holds 66,500 shares or less than 0.1% of the company. James Peters serves as a director of the company.
  • James Zarley sold 196,770 shares on February 20 and currently holds 103,750 shares or 0.1% of the company. James Zarley is Executive Chairman of the Board of Directors.
  • Scott Barlow sold 12,500 shares on February 19-20 and currently holds 111,250 shares or 0.1% of the company. Scott Barlow is Vice President and General Counsel.
  • John Pitstick sold 57,604 shares on February 19 and currently controls 172,361 shares or 0.2% of the company. John Pitstick is Chief Financial Officer of the company.

Insider selling by calendar month

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

MonthInsider selling / sharesInsider buying / shares
March 20134,6610
February 2013282,8740
January 201300
December 201212,7434,500
November 201229,5780
October 201200
September 201200
August 201271,2890
July 201200
June 201228,1980
May 201213,3170
April 201200
March 2012416,7210
February 201275,3810

There have been 934,762 shares sold and 4,500 shares purchased since February 2012.

Financials

The company reported the full year 2012 financial results on February 13 with the following highlights:

Revenue$660.9 million
Net income$101.7 million
Cash$136.6 million
Debt$142.5 million

Outlook

ValueClick's guidance for the first quarter of 2013 is as follows:

Revenue$165 - $168 million
GAAP diluted net income$0.30 - $0.31 per share

Competition

ValueClick's competitors include Digital River (NASDAQ:DRIV) and Google (NASDAQ:GOOG). Here is a table comparing these companies.

CompanyVCLKDRIVGOOGIndustry Average (Internet Information Providers)
Market Cap:2.06B488.27M274.03B10.11M
Employees:1,5621,47353,861358.00
Qtrly Rev Growth (yoy):0.14-0.100.360.00
Revenue:660.88M386.22M50.18B36.82M
Gross Margin:0.620.830.590.30
EBITDA:200.54M37.46M16.28B1.34M
Operating Margin:0.240.030.27-0.00
Net Income:95.93M-195.87M10.79BN/A
EPS:1.29-5.9032.210.47
P/E:21.00N/A25.808.92
PEG (5 yr expected):1.182.041.35N/A
P/S:3.121.255.510.27

ValueClick is trading above the industry average P/S ratio, which could explain some of the insider selling.

My analysis

There have been six insider sell transactions and there have not been any insider buy transactions during the last 30 days. There are eight analyst buy ratings, six neutral ratings and zero sell ratings, with an average target price of $21.00. The stock is trading at a P/E ratio of 21.00 and a forward P/E ratio of 13.10. The company has a book value of $7.85 per share. 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.

Source: 3 Tech Stocks With Recent Intensive Insider Selling