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The technology sector has been the worst-performing group over the recent one year period with a gain of just 1.9%.

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For this article, I screened for technology stocks that 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. Qualcomm (NASDAQ:QCOM) designs, develops, manufactures, and markets digital telecommunications products and services.

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Insider selling by insider (last 30 days)

  • Paul Jacobs sold 52,000 shares on April 8-10 pursuant to a Rule 10b5-1 trading plan. Paul Jacobs currently controls 844,008 shares or less than 0.1% of the company. Paul Jacobs is chairman of the board of directors and chief executive officer of Qualcomm.
  • Matthew Grob sold 21,200 shares on March 18 - April 8 pursuant to a Rule 10b5-1 trading plan. Matthew Grob currently holds 38,200 options or less than 0.1% of the company. Matthew Grob is executive vice president of Qualcomm Technologies, and chief technology officer.
  • Derek Aberle sold 10,000 shares on April 2 pursuant to a Rule 10b5-1 trading plan. Derek Aberle currently holds 132,250 options or less than 0.1% of the company. Derek Aberle serves as executive vice president of Qualcomm, and group president.
  • Margaret Johnson sold 6,000 shares on April 1 pursuant to a Rule 10b5-1 trading plan. Margaret Johnson currently holds 23,942 shares or less than 0.1% of the company. Margaret Johnson is Executive Vice President.
  • Steven Altman sold 75,000 shares on April 1 pursuant to a Rule 10b5-1 trading plan. Steven Altman currently controls 79,926 shares or less than 0.1% of the company. Steven Altman is vice chairman of Qualcomm and a member of Qualcomm's executive committee.
  • James Thompson sold 5,457 shares on March 15 and currently holds 7,704 shares or less than 0.1% of the company. James Thompson serves as executive vice president, engineering of Qualcomm Technologies.
  • Donald Rosenberg sold 50,000 shares on March 15 pursuant to a Rule 10b5-1 trading plan. Donald Rosenberg currently controls 14,709 shares or less than 0.1% of the company. Donald Rosenberg is executive vice president, general counsel and corporate secretary of Qualcomm.

Insider selling by calendar month

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

MonthInsider selling / sharesInsider buying / shares
April 2013153,6000
March 2013412,2410
February 2013304,0570
January 2013626,0030

There have been 1,495,901 shares sold and zero shares purchased this year.

Financials

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

Revenue$6.0 billion
Net income$1.9 billion
Cash$28.4 billion

On March 5, 2013, Qualcomm announced that its Board of Directors has approved a 40 percent increase in the company's quarterly cash dividend and, effective immediately, a new $5.0 billion stock repurchase program to replace the prior $4.0 billion stock repurchase program, which had $2.5 billion of repurchase authority remaining.

The cash dividend will increase from $0.25 to $0.35 per share of common stock and will be effective for quarterly dividends payable after March 27, 2013. This dividend increase will raise the annualized dividend payout to $1.40 per share of common stock.

Outlook

The company's guidance is as follows:

 Q2/FY13FY13
Revenue$5.8-$6.3 billion$23.4-$24.4 billion
GAAP Diluted EPS$0.98-$1.06$3.61-$3.81

Competition

Qualcomm's competitors include Broadcom (NASDAQ:BRCM), Nokia (NYSE:NOK) and Texas Instruments (NASDAQ:TXN). Here is a table comparing these companies.

CompanyQCOMBRCMNOKTXNIndustry Average (Communication Equipment)
Market Cap:115.60B19.53B13.06B39.50B1.31B
Employees:26,60011,30097,79834,1511.01K
Qtrly Rev Growth (yoy):0.290.15-0.20-0.130.00
Revenue:20.46B7.82B39.07B12.82B727.37M
Gross Margin:0.630.490.280.500.33
EBITDA:7.23B1.18B875.22M4.00B11.82M
Operating Margin:0.310.09-0.020.210.05
Net Income:5.83B719.00M-4.02B1.73BN/A
EPS:3.791.25-1.091.510.13
P/E:17.7627.46N/A23.6828.13
PEG (5 yr expected):1.000.808.452.771.37
P/S:5.652.500.333.080.90

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

My analysis

There have been 11 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 17.76 and a forward P/E ratio of 13.76. The company has a book value of $20.59 per share and the stock has a dividend yield of 2.1%. 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 relatively high P/S ratio and the intensive insider selling activity.

2. MetroPCS Communications (PCS), a wireless telecommunications carrier, provides wireless broadband mobile services in the United States.

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Insider selling by insider (last 30 days)

  • Roger Linquist sold 518,125 shares on March 15 - April 5 pursuant to a Rule 10b5-1 trading plan. Roger Linquist currently controls 4,808,074 shares or 1.3% of the company. Roger Linquist co-founded MetroPCS and has served as its Chief Executive Officer and Chairman of the Board of Directors of MetroPCS since its inception.
  • Thomas Keys sold 35,000 shares on April 5 pursuant to a Rule 10b5-1 trading plan. Thomas Keys currently holds 465,027 shares or 0.1% of the company. Thomas Keys is President & Chief Operating Officer.
  • Christine Kornegay sold 20,625 shares on April 2-4 pursuant to a Rule 10b5-1 trading plan. Christine Kornegay currently holds 88,584 shares or less than 0.1% of the company. Christine Kornegay is Senior Vice President, Controller & Chief Accounting Officer.
  • Malcolm Lorang sold 16,250 shares on April 3 pursuant to a Rule 10b5-1 trading plan. Malcolm Lorang currently holds 106,944 shares or less than 0.1% of the company. Malcolm Lorang serves as Senior Vice President and Chief Technical Officer for MetroPCS.
  • Dennis Currier sold 12,500 shares on April 1 pursuant to a Rule 10b5-1 trading plan. Dennis Currier currently holds 110,380 shares or less than 0.1% of the company. Dennis Currier is Senior Vice President, Human Resources.

Insider selling by calendar month

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

MonthInsider selling / sharesInsider buying / shares
April 2013284,3750
March 20131,882,2560
February 2013731,5370
January 2013575,3830

There have been 3,473,551 shares sold and zero shares purchased this year.

Financials

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

Revenue$5.1 billion
Net income$394 million
Cash$2.6 billion
Debt$4.8 billion

Outlook

MetroPCS currently expects to incur capital expenditures in the range of $800 million to $900 million on a standalone consolidated basis for the year ending December 31, 2013.

Competition

MetroPCS's competitors include Sprint Nextel (NYSE:S). Here is a table comparing these two companies.

CompanyPCSSIndustry Average (Wireless Communications)
Market Cap:4.18B18.82B22.94B
Employees:3,70039,0001.96K
Qtrly Rev Growth (yoy):0.040.030.12
Revenue:5.10B35.34B31.36B
Gross Margin:0.430.410.43
EBITDA:1.48B6.86B10.28B
Operating Margin:0.160.010.11
Net Income:391.81M-4.33BN/A
EPS:1.07-1.440.17
P/E:10.71N/A19.74
PEG (5 yr expected):0.68-1.432.72
P/S:0.830.531.06

MetroPCS's valuation is in line with the industry average.

My analysis

There have been 11 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 10.71 and a forward P/E ratio of 15.21. The company has a book value of $9.24 per share. The stock has a $5.5 price target from the Point and Figure chart. I believe there is an opportunity for a short entry with the $5.5 price target. I would place a stop loss at $15, which is the 52-week high. The main reason for the proposed short entry is the intensive insider selling activity.

3. FactSet Research Systems (NYSE:FDS) provides integrated financial information and analytical applications to investment community worldwide.

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Insider selling by insider (last 30 days)

  • Scott Billeadeau sold 2,950 shares on April 10 and currently holds 50 shares or less than 0.1% of the company. Scott Billeadeau serves as a director of the company.
  • Kieran Kennedy sold 4,062 shares on April 9 and currently holds 13,307 shares or less than 0.1% of the company. Kieran Kennedy is Senior Vice President, Director of Sales Operations.
  • Peter Walsh sold 30,000 shares on April 9 and currently holds 35,240 shares or less than 0.1% of the company. Peter Walsh is Executive Vice President, Chief Operating Officer.
  • Michael Dichristina sold 11,998 shares on April 1 and currently holds 19,722 options or less than 0.1% of the company. Michael Dichristina serves as a director of the company.
  • Joseph Laird sold 2,000 shares on March 27 and currently holds 7,000 shares or less than 0.1% of the company. Joseph Laird serves as a director of the company.

Insider selling by calendar month

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

MonthInsider selling / sharesInsider buying / shares
April 201349,0100
March 20132,0000
February 201300
January 201300

There have been 51,010 shares sold and zero shares purchased this year.

Financials

The company reported the fiscal 2013 second-quarter, which ended February 28, financial results on March 19 with the following highlights:

Revenue$213.1 million
Net income$44.5 million
Cash & Investments$166.1 million

Outlook

The company gave the following guidance for the third quarter fiscal 2013:

  • Revenues are expected to range between $213 million and $216 million.
  • GAAP diluted EPS should range between $1.14 and $1.16, the midpoint of the range represents 10% growth over last year's third quarter.

Competition

The global financial information services industry, in which FactSet competes, includes both large and well-capitalized companies, as well as smaller, niche firms. International and U.S. competitors include market data suppliers, news and information providers and many of the content providers that supply the company with financial information included in the FactSet workstation. The main competitors and competitive products include online database suppliers and integrators and their applications, such as Bloomberg L.P., Thomson Reuters (NYSE:TRI), Standard & Poor's including Capital IQ, MSCI Inc. (NYSE:MSCI), Dealogic PLC, Interactive Data Corporation, Dow Jones & Company, Inc., Markit Group Limited, The Yield Book, Inc., Polypaths LLC and Wilshire Associates Incorporated. Many of these firms offer products or services which are similar to those sold by FactSet.

My analysis

There have been five 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 22.04 and a forward P/E ratio of 18.61. The company has a book value of $12.55 per share and the stock has a dividend yield of 1.33%. The stock has a $84 price target from the Point and Figure chart. I believe there is an opportunity for a short entry with the $84 price target. I would place a stop loss at $108, which is the 52-week high. The main reason for the proposed short entry is the intensive insider selling activity.

Source: 2 Telecoms And An Information Services Company With Recent Intensive Insider Selling