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

The technology sector has been the third-worst performing group in one year performance with a gain of 14.2%.

(click to enlarge)

In this article, I will feature two tech stocks that have seen intensive insider selling during the last 30 days. 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%.

1. Micron Technology (NASDAQ:MU) engages in manufacturing and marketing semiconductor devices worldwide.

(click to enlarge)

Insider selling by insider (last 30 days)

  • Mark Adams sold 100,000 shares on June 25 and currently holds 696,750 shares or less than 0.1% of the company. Mark Adams is President at Micron Technology.
  • Brian Shirley sold 94,750 shares on June 24 and currently holds 561,810 shares or less than 0.1% of the company. Brian Shirley is Vice President of DRAM Solutions at Micron Technology.
  • Glen Hawk sold 48,346 shares on June 21 and currently holds 415,257 shares or less than 0.1% of the company. Glen Hawk is Vice President of NAND Solutions at Micron Technology.
  • Scott DeBoer sold 40,000 shares on June 17 pursuant to a Rule 10b5-1 trading plan. Scott DeBoer currently holds 279,673 shares or less than 0.1% of the company. Scott DeBoer is the Vice President of Research & Development at Micron Technology.
  • Ronald Foster sold 45,000 shares on June 3 pursuant to a Rule 10b5-1 trading plan. Ronald Foster currently holds 810,356 shares or less than 0.1% of the company. Ronald Foster is Chief Financial Officer and Vice President of Finance at Micron Technology.
  • Robert Bailey sold 4,000 shares on June 3 pursuant to a Rule 10b5-1 trading plan. Robert Bailey currently holds 143,608 shares or less than 0.1% of the company. Robert Bailey serves as a director of the company.

Insider selling by calendar month

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

MonthInsider selling / sharesInsider buying / shares
June 2013332,0960
May 2013313,7500
April 20131,015,6930
March 20134,0000
February 20134,0000
January 201354,0000

There have been 1,723,539 shares sold and zero shares purchased by the insiders this year.

Financials

The company reported the fiscal 2013 third-quarter, which ended May 30, financial results on June 19 with the following highlights:

Revenue$2.3 billion
Net income$43 million
Cash$2.9 billion
Debt$3.6 billion

Competition

Micron Technology faces intense competition in the semiconductor memory market from a number of companies, including Samsung Electronics Co., Ltd. (OTC:SSNLF); SanDisk Corporation (NASDAQ:SNDK); SK Hynix Inc. (OTC:HXSCL); Spansion Inc. (NYSE:CODE) and Toshiba Corporation (OTCPK:TOSBF). Some of Micron Technology's competitors are large corporations or conglomerates that may have greater resources to withstand downturns in the semiconductor markets, invest in technology and capitalize on growth opportunities. Micron Technology's competitors seek to increase silicon capacity, improve yields, reduce die size and minimize mask levels in their product designs resulting in significantly increased worldwide supply and downward pressure on prices. Many of Micron Technology's high-volume memory products are manufactured to industry standard specifications and as such have similar performance characteristics to those of Micron Technology's competitors. For these high-volume memory products, the principal competitive factors are generally price and performance characteristics including: operating speed, power consumption, reliability, compatibility, size and form factors. For Micron Technology's other memory products, the aforementioned performance characteristics generally take precedence to pricing.

My analysis

There have been six 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 0.60%. The stock is trading at a forward P/E ratio of 15.33 and the company has a book value of $7.12 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.

2. ViaSat (NASDAQ:VSAT) provides fixed and mobile broadband services, and satellite and wireless networks, as well as secure networking systems, products, and services for government and commercial customers worldwide.

(click to enlarge)

Insider selling by insider (last 30 days)

  • Keven Lippert sold 7,172 shares on June 4-21 pursuant to a Rule 10b5-1 trading plan. Keven Lippert currently holds 3,073 shares and 24,150 options or less than 0.1% of the company. Keven Lippert is Vice President, General Counsel and Secretary of the company.
  • Jeffrey Nash sold 1,125 shares on June 17 pursuant to a Rule 10b5-1 trading plan. Jeffrey Nash currently controls 332,815 shares or 0.7% of the company. Jeffrey Nash has been a director of ViaSat since 1987.
  • Allen Lay sold 20,000 shares on June 13 and currently controls 334,013 shares or 0.7% of the company. Allen Lay has been a director of ViaSat since 1996.
  • Steve Estes sold 10,000 shares on June 13 and currently holds 3,793 shares or less than 0.1% of the company. Steve Estes is Vice President, Enterprise Services and Human Resources.
  • John Zlogar sold 5,000 shares on June 11 and currently holds 4,932 shares or less than 0.1% of the company. John Zlogar is Senior Vice President of the company.
  • John Stenbit sold 1,500 shares on June 3 pursuant to a Rule 10b5-1 trading plan. John Stenbit currently controls 8,200 shares and 5,500 options or less than 0.1% of the company. John Stenbit has been a director of ViaSat since August 2004.
  • Mark Miller sold 18,000 shares on May 31 and currently controls 293,731 shares or 0.7% of the company. Mark Miller is Chief Technical Officer and co-founder of ViaSat.
  • Richard Baldridge sold 45,000 shares on May 28 and currently controls 104,307 shares or 0.2% of the company. Richard Baldridge is President and COO of ViaSat.

Insider selling by calendar month

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

MonthInsider selling / sharesInsider buying / shares
June 201344,7970
May 201368,3252,000
April 20131,5000
March 201310,0000
February 201376,0000
January 201300

There have been 210,622 shares sold and 2,000 shares purchased by the insiders this year.

Financials

The company reported the full fiscal year 2013, which ended March 29, financial results on May 16 with the following highlights:

Revenue$1.1 billion
Net loss$41.2 million
Cash$105.7 million
Debt$588.7 million

Outlook

ViaSat believes that it has good potential to achieve attractive and sustained annual gains in revenue, EBITDA and earnings per share in fiscal year 2014 and beyond.

Competition

ViaSat's competitors include Harris Corporation (NYSE:HRS), L-3 Communications Holdings (NYSE:LLL) and Rockwell Collins (NYSE:COL). Here is a table comparing these companies.

CompanyVSATHRSLLLCOL
Market Cap:3.20B5.35B7.62B8.52B
Employees:2,70015,20051,00019,000
Qtrly Rev Growth (yoy):0.28-0.120.01-0.03
Revenue:1.12B5.19B13.17B4.66B
Gross Margin:0.240.340.100.30
EBITDA:129.61M1.05B1.59B1.06B
Operating Margin:-0.020.160.100.19
Net Income:-41.17M522.10M785.00M611.00M
EPS:-0.941.568.404.31
P/E:N/A31.3710.0714.58
PEG (5 yr expected):2.436.206.411.51
P/S:2.861.030.581.83

ViaSat has the highest P/S ratio among these four companies, but is also growing faster than its 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 6.53%. There are four analyst buy ratings, two neutral ratings and three sell ratings with an average target price of $56.25. The stock is trading at a forward P/E ratio of 31.93 and the company has a book value of $20.18 per share. The stock has a $62 price target from the Point and Figure chart. I believe there is an opportunity for a short entry with the $62 target price. I would place a stop loss at $73.50, which is the all time high. The five main reasons for the proposed short entry are negative earnings, relatively high P/S ratio, bearish analyst target prices, bearish Point and Figure chart and the intensive insider selling activity.

Source: 2 Tech Stocks With Recent Intensive Insider Selling