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The Technology Select Sector SPDR ETF (NYSEARCA:XLK) was trading as low as $13.08 in March 2009. The index is currently trading at $31.73 or 142.6% above the low made in March 2009.

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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. Qualcomm (NASDAQ:QCOM) designs, develops, manufactures, and markets digital telecommunications products and services.

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Insider selling by insider (last 30 days)

  • Marc Stern sold 40,000 shares on July 30-31 and currently controls 454,039 shares or less than 0.1% of the company. Marc Stern serves as a director of the company.
  • James Lederer sold 31,338 shares on July 26 and currently holds 6,985 shares and 19,005 options or less than 0.1% of the company. James Lederer serves as executive vice president of Qualcomm Technologies and general manager of QCT.
  • Steven Altman sold 75,000 shares on July 1-26 pursuant to a Rule 10b5-1 trading plan. Steven Altman currently controls 79,926 shares and 49,164 options or less than 0.1% of the company. Steven Altman is vice chairman of Qualcomm and a member of Qualcomm's executive committee.
  • Derek Aberle sold 6,000 shares on July 2-26 pursuant to a Rule 10b5-1 trading plan. Derek Aberle currently holds 2,264 shares and 21,750 options or less than 0.1% of the company. Derek Aberle serves as executive vice president of Qualcomm, and group president.
  • Matthew Grob sold 26,500 shares on July 1-29 pursuant to a Rule 10b5-1 trading plan. Matthew Grob currently controls 14,297 shares and 58,400 options or less than 0.1% of the company. Matthew Grob is executive vice president of Qualcomm Technologies, and chief technology officer.
  • Steven Mollenkopf sold 8,250 shares on July 11 pursuant to a Rule 10b5-1 trading plan. Steven Mollenkopf currently holds 25,883 shares and 23,001 options or less than 0.1% of the company. Steven Mollenkopf serves as president and chief operating officer of Qualcomm.
  • Margaret Johnson sold 6,000 shares on July 1 pursuant to a Rule 10b5-1 trading plan. Margaret Johnson currently holds 23,942 shares and 27,500 options or less than 0.1% of the company. Margaret Johnson is Executive Vice President of Qualcomm Technologies and president of global market development.

Insider selling by calendar month

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

MonthInsider selling / sharesInsider buying / shares
July 2013193,0880
June 2013144,7830
May 2013335,7230
April 2013429,2500
March 2013412,2410
February 2013304,0570
January 2013626,0030

There have been 2,445,145 shares sold and there have been zero shares purchased by the insiders this year.

Financials

The company reported the fiscal 2013 third-quarter, which ended June 30, financial results on July 24 with the following highlights:

Revenue$6.2 billion
Net income$1.6 billion
Cash$30.4 billion

Outlook

The company's guidance is as follows:

 Q4/FY13FY13
Revenue$5.9-$6.6 billion$24.3-$25.0 billion
GAAP Diluted EPS$0.86-$0.94$3.90-$3.98

Competition

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

CompanyBRCMQCOMTXN
Market Cap:15.99B111.16B43.46B
Employees:11,30026,60034,151
Qtrly Rev Growth (yoy):0.060.35-0.09
Revenue:8.13B23.26B12.30B
Gross Margin:0.500.620.50
EBITDA:1.26B8.09B3.86B
Operating Margin:0.100.300.21
Net Income:411.00M6.60B2.03B
EPS:0.723.771.81
P/E:38.1417.2021.75
PEG (5 yr expected):0.700.852.67
P/S:1.964.763.51

Qualcomm has the highest P/S ratio among these three 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 1.25%. The stock is trading at a P/E ratio of 17.15 and a forward P/E ratio of 13.08. The company has a book value of $21.76 per share and the stock has a dividend yield of 2.20%. The stock has a $58 price target from the Point and Figure chart. I believe there is an opportunity for a short entry with the $58 target price. I would place a stop loss at $68, which is the 9-year high. The three main reasons for the proposed short entry are relatively high P/S ratio, bearish Point and Figure chart and the intensive insider selling activity.

2. Intel Corporation (NASDAQ:INTC) designs, manufactures, and sells integrated digital technology platforms worldwide.

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Insider selling by insider (last 30 days)

  • James Plummer sold 6,815 shares on July 29 and currently holds 14,938 shares or less than 0.1% of the company. James Plummer serves as a director of the company.
  • Frank Yeary sold 6,500 shares on July 25 and currently holds 51,138 shares or less than 0.1% of the company. Frank Yeary serves as a director of the company.
  • Thomas Kilroy sold 3,378 shares on July 25 pursuant to a 10b5-1(c) plan. Thomas Kilroy currently controls 148,448 shares or less than 0.1% of the company. Thomas Kilroy is executive vice president and general manager of Intel's Sales and Marketing Group.
  • William Holt sold 5,561 shares on July 25 pursuant to a 10b5-1(c) plan. William Holt currently controls 112,803 shares or less than 0.1% of the company. William Holt is executive vice president and general manager of Intel Corporation's Technology and Manufacturing Group.

Insider selling by calendar month

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

MonthInsider selling / sharesInsider buying / shares
July 201322,2540
June 2013698,8830
May 2013407,4160
April 2013110,4610
March 201387,6920
February 201338,9280
January 201347,2470

There have been 1,412,881 shares sold and there have been zero shares purchased by the insiders this year.

Financials

The company reported the second-quarter financial results on July 17 with the following highlights:

Revenue$12.8 billion
Net income$2.0 billion
Cash$17.4 billion
Debt$13.4 billion

Outlook

The company's third quarter guidance is as follows:

  • Revenue: $13.5 billion, plus or minus $500 million.
  • Gross margin percentage: 61 percent, plus or minus a couple of percentage points.
  • R&D plus MG&A spending: approximately $4.8 billion.
  • Amortization of acquisition-related intangibles: approximately $70 million.
  • Impact of equity investments and interest and other: approximately $400 million net gain.
  • Depreciation: approximately $1.7 billion.

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

  • Revenue: Approximately flat year-on-year, down from prior expectations of low single digit percentage increase.
  • Gross margin percentage: 59 percent, plus or minus a couple percentage points, down from prior expectations of 60 percent, plus or minus a few percentage points.
  • R&D plus MG&A spending: $18.7 billion, plus or minus $200 million, down $200 million from prior expectations.
  • Amortization of acquisition-related intangibles: approximately $300 million, unchanged from prior expectations.
  • Depreciation: $6.8 billion, plus or minus $100 million, unchanged from prior expectations.
  • Tax Rate: approximately 26 percent for each of the remaining quarters of the year.
  • Full-year capital spending: $11.0 billion, plus or minus $500 million, down $1.0 billion from prior expectations.

Competition

Intel's competitors include Advanced Micro Devices (NYSE:AMD) and Texas Instruments . Here is a table comparing these companies.

CompanyINTCAMDTXN
Market Cap:116.16B2.84B43.14B
Employees:106,0009,92834,151
Qtrly Rev Growth (yoy):-0.05-0.18-0.09
Revenue:52.32B4.67B12.30B
Gross Margin:0.590.470.50
EBITDA:20.26B421.00M3.86B
Operating Margin:0.230.040.21
Net Income:9.48B-850.00M2.03B
EPS:1.85-1.141.81
P/E:12.61N/A21.61
PEG (5 yr expected):1.13-2.212.67
P/S:2.220.613.51

Intel 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 0.10%. The stock is trading at a P/E ratio of 12.61 and a forward P/E ratio of 11.81. The company has a book value of $10.82 per share and the stock has a dividend yield of 3.86%. 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: 2 Tech Mega-Caps With Recent Intensive Insider Selling