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

There was intensive insider selling in Zynga (NASDAQ:ZNGA) in April 2012 at $11.64. The stock is currently trading at $3.18 or 72.7% below the April 2012 price level.

(click to enlarge)

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. Zynga develops, markets, and operates online social games as live services on the Internet, social networking sites, and mobile platforms in the United States and internationally.

(click to enlarge)

Insider selling by insider (last 30 days)

  • Mark Vranesh sold 129,663 shares on April 1-16 pursuant to a Rule 10b5-1 plan. Mark Vranesh currently holds 65,296 shares or less than 0.1% of the company. Mark Vranesh is Chief Financial Officer of Zynga.
  • Barry Cottle sold 65,027 shares on April 16 pursuant to a Rule 10b5-1 plan. Barry Cottle currently holds 59,973 shares or less than 0.1% of the company. Barry Cottle is Chief Revenue Officer of Zynga.
  • Cadir Lee sold 50,012 shares on April 9-10 pursuant to a Rule 10b5-1 plan. Cadir Lee currently holds 602,317 shares or less than 0.1% of the company. Cadir Lee is Chief Technology Officer of Zynga.
  • Jeffrey Katzenberg sold 49,500 shares on April 1 pursuant to a Rule 10b5-1 plan. Jeffrey Katzenberg currently controls 190,410 shares or less than 0.1% of the company. Jeffrey Katzenberg has served on Zynga's Board since February 2011.

Insider selling by calendar month

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

MonthInsider selling / sharesInsider buying / shares
April 2013294,2020
March 2013327,4360
February 2013523,7280
January 2013332,4640

There have been 1,477,830 shares sold and zero shares purchased this year.

Financials

The company reported the full year 2012 financial results on February 5 with the following highlights:

Revenue$1.3 billion
Net loss$209.4 million
Cash$1.7 billion
Debt$100.0 million

Outlook

Zynga's outlook for the first quarter of 2013 is as follows:

  • Revenue is projected to be in the range of $255 million to $265 million.
  • Net loss is projected to be in the range of $32 million to $12 million.

For full year 2013:

  • Zynga is targeting an adjusted EBITDA margin (adjusted EBITDA as a percentage of bookings) of 0% to 10%.

Competition

Zynga's competitors include DeNA Co. (OTC:DNACF) and Electronic Arts (NASDAQ:EA). Here is a table comparing these companies.

CompanyZNGADNACFEAIndustry Average (Internet Information Providers)
Market Cap:2.50B3.73B5.08B2.59B
Employees:3,0581,8109,2003.07K
Qtrly Rev Growth (yoy):0.000.53-0.130.56
Revenue:1.28B2.45B3.96B1.37B
Gross Margin:0.730.740.640.68
EBITDA:57.03M1.05B393.00M501.14M
Operating Margin:-0.070.400.040.20
Net Income:-209.45M561.80M175.00MN/A
EPS:-0.284.020.551.12
P/E:N/A6.8930.9724.63
PEG (5 yr expected):-3.26N/A1.411.19
P/S:1.951.521.284.50

Zynga is the only company not profitable currently.

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 forward P/E ratio of 318.00 and the company has a book value of $2.34 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 negative earnings and the intensive insider selling activity.

2. Dish Network Corporation (NASDAQ:DISH) offers direct broadcast satellite subscription television services in the United States.

(click to enlarge)

Insider selling by insider (last 30 days)

  • Roger Lynch sold 4,000 shares on April 15 pursuant to a Rule 10b5-1 trading plan. Roger Lynch currently holds 108,000 options or less than 0.1% of company. Roger Lynch is Executive Vice President, Advanced Technologies.
  • David Shull sold 5,000 shares on April 5 pursuant to a Rule 10b5-1 trading plan. David Shull currently holds 20,000 options or less than 0.1% of company. David Shull is Executive Vice President and Chief Commercial Officer.
  • Bernard Han sold 175,000 shares on April 2 pursuant to a Rule 10b5-1 trading plan. Bernard Han currently holds 5,984 shares or less than 0.1% of company. Bernard Han is Executive Vice President and Chief Operating Officer.
  • Paul Orban sold 180 shares on April 1 pursuant to a Rule 10b5-1 trading plan. Paul Orban currently holds 220 shares or less than 0.1% of company. Paul Orban is Senior Vice President and Corporate Controller.
  • Kyle Kiser sold 5,000 shares on March 28 pursuant to a Rule 10b5-1 trading plan. Kyle Kiser currently holds 36,805 shares or less than 0.1% of company. Kyle Kiser is Treasurer of the company.
  • David Moskowitz sold 100,000 shares on March 28 pursuant to a Rule 10b5-1 trading plan. David Moskowitz currently holds 127,779 shares or less than 0.1% of company. David Moskowitz is Senior Advisor of the company.

Insider selling by calendar month

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

MonthInsider selling / sharesInsider buying / shares
April 2013184,1800
March 2013109,0000
February 201350,7480
January 20134,2100

The month of April has seen the most insider selling.

Financials

The company reported the full year 2012 financial results on February 20 with the following highlights:

Revenue$14.3 billion
Net income$637 million
Cash$7.2 billion
Debt$11.9 billion

News

Dish announced on April 15 that it has submitted a merger proposal to the Board of Directors of Sprint Nextel Corporation (NYSE:S) for a total cash and stock consideration of $25.5 billion.

Competition

Dish's competitors include Comcast Corporation (NASDAQ:CMCSA) and DirecTV (NASDAQ:DTV). Here is a table comparing these companies.

CompanyDISHCMCSADTVIndustry Average (CATV Systems)
Market Cap:17.34B106.50B30.99B32.76B
Employees:35,000129,00027,20050.25K
Qtrly Rev Growth (yoy):-0.010.060.080.00
Revenue:14.27B62.57B29.74B13.25B
Gross Margin:0.400.680.480.47
EBITDA:2.96B19.98B7.23B3.91B
Operating Margin:0.140.190.170.13
Net Income:636.69M6.20B2.95BN/A
EPS:1.412.284.581.53
P/E:27.1617.7011.8115.54
PEG (5 yr expected):3.101.000.681.08
P/S:1.201.711.042.47

Dish is trading above the industry average P/E 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. The stock is trading at a P/E ratio of 27.16 and a forward P/E ratio of 15.70. The company has a book value of $0.08 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 relatively high P/E ratio and the intensive insider selling activity.

3. Liberty Global (NASDAQ:LBTYA) provides video, broadband Internet, and telephony services to residential and business customers primarily in Europe and Chile.

(click to enlarge)

Insider selling by insider (last 30 days)

  • Miranda Curtis sold 13,298 shares on April 16 and currently holds 122,767 shares or less than 0.1% of the company. Miranda Curtis serves as a director of the company.
  • Balan Nair sold 10,000 shares on March 27 and currently holds 73,279 shares or less than 0.1% of the company. Balan Nair is Executive Vice President and Chief Technology Officer for Liberty Global.
  • Bernard Dvorak sold 20,000 shares on March 20 and currently holds 66,184 shares or less than 0.1% of the company. Bernard Dvorak is Executive Vice President and Co-Chief Financial Officer (Principal Accounting Officer) of Liberty Global.

Insider selling by calendar month

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

MonthInsider selling / sharesInsider buying / shares
April 201313,2980
March 201330,0000
February 201300
January 201300

There have been 43,298 shares sold and zero shares purchased this year.

Financials

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

Revenue$10.3 billion
Net income$322.8 million
Cash$3.1 billion
Debt$27.5 billion

Competition

The markets for video, broadband internet, telephony and mobile services, and for programming, are highly competitive and rapidly evolving. Consequently, Liberty Global's businesses have faced and are expected to continue to face significant competition in these markets in the countries in which they operate and specifically, as a result of deregulation, in the EU.

My analysis

There have been three 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 60.31 and a forward P/E ratio of 21.49. The company has a book value of $8.54 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 high P/E ratio and the intensive insider selling activity.

Source: 1 Game Developer, 1 Broadband And A Satellite Service Provider With Recent Intensive Insider Selling