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

There was intensive insider selling in Boingo Wireless (NASDAQ:WIFI) in March 2012. The stock peaked at $13.25 on March 29, 2012 and is currently trading at $6.26 or 52.8% below those highs.

(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 two tech stocks that met these three criteria of intensive insider selling in the last 30 days.

1. OmniVision Technologies (NASDAQ:OVTI) engages in designing, developing, and marketing semiconductor image-sensor devices worldwide.

(click to enlarge)

Insider selling by insider (last 30 days)

  • Howard Rhodes sold 22,985 shares on July 2 and currently holds 83,073 restricted shares and 53,000 options or 0.3% of the company. Howard Rhodes was appointed as the Chief Technical Officer in February 2012.
  • Henry Yang sold 10,560 shares on July 2 and currently holds 56,980 shares or 0.1% of the company. Henry Yang was appointed as OmniVision's Chief Operating Officer in February 2012.
  • Anson Chan sold 53,123 shares on June 18 and currently holds 56,980 shares or 0.1% of the company. Anson Chan is Chief Financial Officer and Vice President of Finance.
  • Y. Vicky Chou sold 6,646 shares on June 18 and currently holds 42,459 shares or less than 0.1% of the company. Y. Vicky Chou was appointed as the Senior Vice President of Global Management and General Counsel in February 2012.

Insider selling by calendar month

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

MonthInsider selling / sharesInsider buying / shares
July 201333,5450
June 201380,3570
May 201300
April 201300
March 201335,0000
February 201300
January 20134,0000

There have been 152,902 shares sold and there have been zero shares purchased by the insiders this year.

Financials

The company reported the full fiscal year 2013, which ended April 30, financial results on May 30 with the following highlights:

Revenue$1.4 billion
Net income$42.9 million
Cash$212.3 million
Debt$39.5 million

Outlook

Based on current trends, the company expects revenues for the first quarter of fiscal 2014 will be in the range of $355 million to $390 million and GAAP net income per share will be between $0.21 and $0.38 per diluted share. Excluding the estimated expense and related tax effects associated with stock-based compensation, the company expects its non-GAAP net income per share will be between $0.35 and $0.52 per diluted share.

Competition

OmniVision's competitors include Sharp (OTCPK:SHCAY) and STMicroelectronics (NYSE:STM). Here is a table comparing these companies.

CompanyOVTISHCAYSTM
Market Cap:939.55M4.84B8.55B
Employees:2,05750,64748,460
Qtrly Rev Growth (yoy):0.540.26-0.00
Revenue:1.41B31.50B8.48B
Gross Margin:0.170.110.32
EBITDA:81.20M293.14M411.00M
Operating Margin:0.03-0.06-0.07
Net Income:42.90M-6.93B-1.15B
EPS:0.80-6.22-1.30
P/E:21.49N/AN/A
PEG (5 yr expected):0.490.01189.00
P/S:0.690.160.99

OmniVision has the second highest P/S ratio among these three companies.

My analysis

There have been four 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 P/E ratio of 21.49 and a forward P/E ratio of 9.42. The company has a book value of $15.67 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. Synchronoss Technologies (NASDAQ:SNCR) provides software-based activation and personal cloud solutions for connected devices.

(click to enlarge)

Insider selling by insider (last 30 days)

  • Paula Hilbert sold 11,268 shares on June 28 - July 8 pursuant to an approved Rule 10b5-1 trading plan. Paula Hilbert currently holds 26,043 shares and 58,636 options or 0.2% of the company. Paula Hilbert is Executive Vice President of Human Resources.
  • Karen Rosenberger sold 112 shares on July 5 pursuant to an approved Rule 10b5-1 trading plan. Karen Rosenberger currently holds 19,661 shares or less than 0.1% of the company. Karen Rosenberger is Chief Accounting Officer.
  • Robert Garcia sold 9,956 shares on June 26 - July 5 pursuant to an approved Rule 10b5-1 trading plan. Robert Garcia currently holds 92,234 shares or 0.2% of the company. Robert Garcia has been with Synchronoss since August 2000, and serves as President and Chief Operating Officer.
  • Patrick Doran sold 177 shares on June 19 - July 5 pursuant to an approved Rule 10b5-1 trading plan. Patrick Doran currently holds 38,371 shares or 0.1% of the company. Patrick Doran has been with Synchronoss since 2002 and serves as Chief Technology Officer.
  • Lawrence Irving sold 5,907 shares on June 26 pursuant to an approved Rule 10b5-1 trading plan. Lawrence Irving currently holds 147,390 shares and 46,960 options or 0.5% of the company. Lawrence Irving is Chief Financial Officer, Executive Vice President and Treasurer.
  • Ronald Prague sold 5,000 shares on June 26 pursuant to an approved Rule 10b5-1 trading plan. Ronald Prague currently holds 30,758 shares or less than 0.1% of the company. Ronald Prague serves as Executive Vice President, General Counsel and Secretary and has been with Synchronoss Technologies since August of 2006.
  • Stephen Waldis sold 55,000 shares on June 18-20 pursuant to an approved Rule 10b5-1 trading plan. Stephen Waldis currently holds 823,716 shares or 2.2% of the company. Stephen Waldis is Founder, Chairman and Chief Executive Officer of Synchronoss Technologies.

Insider selling by calendar month

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

MonthInsider selling / sharesInsider buying / shares
July 201311,7700
June 201389,4270
May 2013111,6380
April 201391,3770
March 2013116,5180
February 201378,5510
January 201352,8570

There have been 552,138 shares sold and there have been zero shares purchased by the insiders this year.

Financials

The company reported the first-quarter financial results on May 1 with the following highlights:

Revenue$78.3 million
Net income$0.5 million
Cash$66.5 million
Debt$9.3 million

Outlook

The company's guidance for full-year 2013 is as follows:

  • Non-GAAP revenues are expected to be in the range of $335 million to $350 million, representing year-over-year growth of 22% to 27%.
  • Non-GAAP EPS of approximately $1.30 to $1.36.

The company' guidance for the second quarter 2013 is as follows:

  • Non-GAAP revenues in the range of $82 million to $84 million, which represents year-over-year growth of approximately 16% to 20%.
  • Non-GAAP EPS of approximately $0.28 to $0.31.

Competition

Synchronoss' competitors include Amdocs Limited (NASDAQ:DOX), CSG Systems International (NASDAQ:CSGS) and NeuStar (NYSE:NSR). Here is a table comparing these companies.

CompanySNCRDOXCSGSNSR
Market Cap:1.12B6.18B751.02M3.42B
Employees:1,34020,1053,5421,543
Qtrly Rev Growth (yoy):0.210.03-0.020.08
Revenue:287.41M3.29B752.49M848.22M
Gross Margin:0.590.350.490.78
EBITDA:62.74M612.43M139.87M377.95M
Operating Margin:0.130.140.120.33
Net Income:22.08M400.70M51.97M155.89M
EPS:0.562.431.612.30
P/E:51.9315.8114.6622.59
PEG (5 yr expected):1.091.561.421.04
P/S:3.801.871.004.01

Synchronoss has the second highest P/S ratio among these four companies.

My analysis

There have been seven 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 3.20%. The stock is trading at a P/E ratio of 51.93 and a forward P/E ratio of 17.83. The company has a book value of $10.08 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.

Source: 1 Software And 1 Semiconductor Small Cap With Recent Intensive Insider Selling