3 Tech Stocks With Recent Intensive Insider Selling

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 |  Includes: CRM, SYNA, WDC
by: Markus Aarnio

There was intensive insider selling in Uni-Pixel (NASDAQ:UNXL) in March when the stock was trading above $22. The stock is currently trading at $14.93, or 32% below the March level.

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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 technology sector stocks that met these three criteria of intensive insider selling in the last 30 days.

1. Salesforce.com (NYSE:CRM) provides cloud computing and social enterprise solutions to various businesses and industries worldwide.

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Insider selling by insider (last 30 days)

  • Blair Crump sold 760 shares on May 29 and currently holds 12,692 shares or less than 0.1% of the company. Blair Crump is president of Salesforce.com's global enterprise business unit.
  • Maria Martinez sold 3,978 shares on May 23-29 and currently holds 3,374 shares or less than 0.1% of the company. Maria Martinez is Executive Vice President, Customers for Life and Chief Growth Officer.
  • Parker Harris sold 60,379 shares on May 7-28 pursuant to a 10b5-1 plan. Parker Harris currently holds 244,886 shares or less than 0.1% of the company. Parker Harris founded salesforce.com along with Marc Benioff, Dave Moellenhoff and Frank Dominguez in the spring of 1999. As executive vice president, Harris oversees the development of all software for salesforce.com.
  • Frank van Veenendaal sold 2,320 shares on May 23-28 and currently holds 15,456 shares or less than 0.1% of the company. Frank van Veenendaal is vice chairman of salesforce.com and leads the global sales, customer support, and consulting services organizations.
  • Hilarie Koplow sold 9,436 shares on May 3-29 and currently holds 93,152 shares or less than 0.1% of the company. Hilarie Koplow leads Salesforce.com's worldwide sales teams, focusing on growing the company's business globally.
  • George Hu sold 2,189 shares on May 23-28 and currently holds 17,735 shares or less than 0.1% of the company. George Hu is Chief Operating Officer of the company.
  • Graham Smith sold 7,644 shares on May 15-28 and currently holds 83,068 shares or less than 0.1% of the company. Graham Smith is Executive Vice President and Chief Financial Officer of the company.
  • Burke Norton sold 5,623 shares on May 23 and currently holds 37,785 shares or less than 0.1% of the company. Burke Norton is Executive Vice President and Chief Legal Officer.

Insider selling by calendar month

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

Month Insider selling / shares Insider buying / shares
May 2013 94,329 0
April 2013 55,205 0
March 2013 58,468 0
February 2013 36,205 0
January 2013 60,895 0
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The month of May has seen the most insider selling this year.

Financials

The company reported the fiscal 2014 first-quarter, which ended April 30, financial results on May 23 with the following highlights:

Revenue $892.6 million
Net loss $67.7 million
Cash $3.1 billion
Debt $1.7 billion
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Outlook

Q2 FY14 Guidance:

  • Revenue for the company's second fiscal quarter is projected to be in the range of $931 million to $936 million, an increase of 27% to 28% year-over-year. GAAP net loss per share is expected to be in the range of ($0.07) to ($0.06), while diluted non-GAAP EPS is expected to be in the range of $0.11 to $0.12.

Full Year FY14 Guidance:

  • Revenue for the company's full fiscal year 2014 is projected to be in the range of $3.835 billion to $3.875 billion, an increase of 26% to 27% year-over-year. GAAP net loss per share is expected to be in the range of ($0.33) to ($0.31) while diluted non-GAAP EPS is expected to be in the range of $0.47 to $0.49.

Competition

Salesforce.com's competitors include Oracle Corporation (NYSE:ORCL) and SAP AG (NYSE:SAP). Here is a table comparing these companies.

Company CRM ORCL SAP Industry Average (Application Software)
Market Cap: 24.97B 159.13B 87.58B 470.39M
Employees: 9,800 115,000 64,598 778.00
Qtrly Rev Growth (yoy): 0.28 -0.01 0.08 1.32
Revenue: 3.25B 37.15B 21.33B 91.77M
Gross Margin: 0.77 0.80 0.72 0.73
EBITDA: 72.45M 17.29B 7.22B 28.63M
Operating Margin: -0.04 0.39 0.28 0.22
Net Income: -318.69M 10.57B 3.75B N/A
EPS: -0.56 2.15 3.15 0.20
P/E: N/A 15.73 23.34 25.78
PEG (5 yr expected): 3.06 1.20 1.53 0.70
P/S: 7.69 4.28 4.11 5.13
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Salesforce.com's P/S ratio is above the industry average, which could explain some of the insider selling.

My analysis

There have been eight different insiders selling the shares and there have not been any insiders buying the shares during the past 30 days. The company has an insider ownership of 0.41%. The stock is currently trading at a forward P/E ratio of 67.19 and the company has a book value of $4.17 per share. 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. Sandisk Corporation (SNDK) designs, develops, manufactures, and markets flash storage card products that are used in various consumer electronics products.

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Insider selling by insider (last 30 days)

  • Judy Bruner sold 80,000 shares on May 7-30 pursuant to a Rule 10b-5(1) sales plan. Judy Bruner currently holds 35,000 options or less than 0.1% of the company. Judy Bruner is Executive Vice President, Administration and Chief Financial Officer.
  • Sanjay Mehrotra sold 45,000 shares on May 9-30 pursuant to a Rule 10b-5(1) sales plan. Sanjay Mehrotra currently holds 26,000 options or less than 0.1% of the company. Sanjay Mehrotra is co-founder, president and chief executive officer of SanDisk Corporation.
  • Catherine Lego sold 18,250 shares on May 8-22 pursuant to a Rule 10b-5(1) sales plan. Catherine Lego currently holds 44,000 options or less than 0.1% of the company. Catherine Lego serves as a director of the company.
  • Steven Gomo sold 12,500 shares on May 15 and currently holds 16,021 shares or less than 0.1% of the company. Steven Gomo serves as a director of the company.
  • Sumit Sadana sold 14,481 shares on May 14 and currently holds 19,900 options or less than 0.1% of the company. Sumit Sadana has served as chief strategy officer since April 2010.

Insider selling by calendar month

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

Month Insider selling / shares Insider buying / shares
May 2013 170,231 0
April 2013 32,000 0
March 2013 197,000 0
February 2013 129,265 0
January 2013 60,000 0
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There have been 588,496 shares sold and zero shares purchased this year.

Financials

The company reported the first-quarter financial results on April 17 with the following highlights:

Revenue $1.3 billion
Net income $166.2 million
Cash $6.2 billion
Debt $1.7 billion
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Outlook

The company's guidance is as follows:

  2Q/2013 FY2013
Revenue $1.35-$1.4 billion $5.6-$5.75 billion
Non-GAAP gross margin 41%-43% 42%-44%
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Competition

Sandisk's competitors include Sony (NYSE:SNE). Here is a table comparing these two companies.

Company SNDK SNE
Market Cap: 14.29B 19.43B
Employees: 4,636 N/A
Qtrly Rev Growth (yoy): 0.11 0.10
Revenue: 5.19B 86.42B
Gross Margin: 0.35 0.21
EBITDA: 1.19B 7.21B
Operating Margin: 0.15 0.03
Net Income: 469.25M 546.83M
EPS: 1.92 0.51
P/E: 30.74 37.81
PEG (5 yr expected): 0.51 0.93
P/S: 2.77 0.24
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Sandisk is trading at a higher P/S ratio than Sony.

My analysis

There have been five different insiders selling the shares and there have not been any insiders buying the shares during the past 30 days. The company has an insider ownership of 0.04%. The stock is currently trading at a P/E ratio of 30.74 and a forward P/E ratio of 12.37. The company has a book value of $30.08 per share. Before entering short this stock, I would like to get a bearish confirmation from the Point and Figure chart. The main reason for the proposed short entry is the intensive insider selling activity.

3. Synaptics Incorporated (NASDAQ:SYNA) develops and supplies custom-designed human interface solutions that enable people to interact with various mobile computing, communications, entertainment, and other electronic devices in China, Japan, Taiwan, Korea, and the United States.

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Insider selling by insider (last 30 days)

  • James Whims sold 18,750 shares on May 30 and currently holds 20,250 shares or less than 0.1% of the company. James Whims has been a director of the company since October 2007.
  • Stan Swearingen sold 16,043 shares on May 28 and currently holds 18,125 shares or less than 0.1% of the company. Stan Swearingen joined Synaptics in July 2010 and serves as CTO and Senior Vice President of Advanced Development.
  • Nelson Chan sold 37,500 shares on May 15 and currently holds 9,062 shares or less than 0.1% of the company. Nelson Chan has been a director of the company since February 2007.
  • Rick Bergman sold 30,000 shares on May 15 and currently holds 400,000 options or 1.2% of the company. Rick Bergman is the President and CEO of Synaptics.
  • Keith Geeslin sold 60,937 shares on May 14 and currently holds 12,936 shares or less than 0.1% of the company. Keith Geeslin has been a director of the company since 1986.
  • Francis Lee sold 30,000 shares on May 9 pursuant to a 10b5-1 sales plan. Francis Lee currently holds 138,475 options or 0.4% of the company. Francis Lee has been the Chairman of the Board of the company since October 2008 and a director of the company since December 1998.
  • Jeffrey Buchanan sold 34,375 shares on May 10 pursuant to a 10b5-1 sales plan. Jeffrey Buchanan currently holds 9,000 shares or less than 0.1% of the company. Jeffrey Buchanan has been a director of the company since September 2005.
  • Richard Sanquini sold 2,314 shares on May 3 and currently controls 19,047 shares or less than 0.1% of the company. Richard Sanquini has been a director of the company since 1994.

Insider selling by calendar month

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

Month Insider selling / shares Insider buying / shares
May 2013 376,642 0
April 2013 8,200 0
March 2013 62,189 0
February 2013 0 0
January 2013 0 0
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The month of May has seen the most insider selling this year.

Financials

The company reported the fiscal 2013 third-quarter, which ended March 31, financial results on April 25 with the following highlights:

Revenue $163.3 million
Net income $36.4 million
Cash $315.5 million
Debt $2.3 million
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Outlook

Kathy Bayless, CFO, commented on April 25:

"Considering our backlog of approximately $124.0 million, customer forecasts, and the resulting expected product mix, we anticipate revenue to be in the range of $190.0 million to $205.0 million for the June quarter, an increase of 38% to 49% on a year-over-year basis. Our strong June quarter backlog and outlook reflects a steep ramp of new designs across multiple mobile customers."

Competition

Synaptics' competitors include Atmel Corporation (NASDAQ:ATML) and Cypress Semiconductor Corporation (NASDAQ:CY). Here is a table comparing these companies.

Company SYNA ATML CY
Market Cap: 1.32B 3.39B 1.62B
Employees: 697 5,000 3,600
Qtrly Rev Growth (yoy): 0.24 -0.08 -0.07
Revenue: 571.01M 1.40B 757.33M
Gross Margin: 0.48 0.41 0.52
EBITDA: 73.96M 129.88M 67.18M
Operating Margin: 0.11 0.04 0.02
Net Income: 65.91M -37.61M -31.10M
EPS: 1.93 -0.09 -0.21
P/E: 21.11 N/A N/A
PEG (5 yr expected): 1.26 2.37 -2.84
P/S: 2.35 2.40 2.18
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Synaptics' P/S ratio is in line with its direct competitors'.

My analysis

There have been eight different insiders selling the shares and there have not been any insiders buying the shares during the past 30 days. The company has an insider ownership of 0.54%. The stock is currently trading at a P/E ratio of 21.11 and a forward P/E ratio of 12.89. The company has a book value of $14.02 per share. Before entering short this stock, I would like to get a bearish confirmation from the Point and Figure chart. The main reason for the proposed short entry is the intensive insider selling activity.

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.