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There was intensive insider selling in Apple (NASDAQ:AAPL) in April 2012, when the stock was trading above $600. The stock peaked at $693.21 in September 2012, and plunged all the way to $382.57 in April this year or 44.8% below the September 2012 all-time high.

(click to enlarge)

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%.

There was intensive insider selling in Apple again in July this year. This was the first time since April 2012 that Apple saw intensive insider selling. Three different insiders sold most of their Apple shares:

  • William Campbell sold 10,000 shares on July 29, pursuant to a Rule 10b5-1 trading plan. William Campbell currently holds 1,961 shares or less than 0.1% of the company. William Campbell serves as a director of the company.
  • Millard Drexler sold 32,562 shares on July 29, and currently holds 971 shares or less than 0.1% of the company. Millard Drexler serves as a director of the company.
  • Peter Oppenheimer sold 37,172 shares on July 24, pursuant to a Rule 10b5-1 trading plan. Peter Oppenheimer currently holds 4,834 shares or less than 0.1% of the company. Peter Oppenheimer is Senior Vice President and Chief Financial Officer of the company.

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

MonthInsider selling / sharesInsider buying / shares
July 201379,7340
June 201373,9910
May 201300
April 20132,1740
March 201300
February 201300
January 201300

There have been 155,899 shares sold and there have been zero shares purchased by the insiders this year.

Financials

Apple reported the fiscal 2013 third-quarter, which ended June 29, financial results on July 23 with the following highlights:

Revenue$35.3 billion
Net income$6.9 billion
Cash and investments$146.6 billion
Debt$17.0 billion

Outlook

Apple provided the following guidance for its fiscal 2013 fourth quarter:

  • revenue between $34 billion and $37 billion
  • gross margin between 36 percent and 37 percent
  • operating expenses between $3.9 billion and $3.95 billion
  • other income/(expense) of $200 million
  • tax rate of 26.5%

Competition

Apple's competitors include Google (NASDAQ:GOOG), Hewlett-Packard Company (NYSE:HPQ) and BlackBerry (NASDAQ:BBRY). Here is a table comparing these companies.

CompanyAAPLGOOGHPQBBRY
Market Cap:420.22B302.01B52.07B4.60B
Employees:72,80044,777331,80012,700
Qtrly Rev Growth (yoy):0.010.20-0.100.09
Revenue:169.40B55.80B115.57B11.34B
Gross Margin:0.380.570.240.33
EBITDA:55.87B17.00B14.00B1.32B
Operating Margin:0.290.240.08-0.05
Net Income:37.75B10.94B-13.40B-202.00M
EPS:40.1134.57-6.85-0.41
P/E:11.5326.23N/AN/A
PEG (5 yr expected):0.651.434.412.15
P/S:2.455.400.440.40

Apple has the second-highest P/S ratio among these four companies. Google and BlackBerry have seen insider selling during the past 30 days as well but it has not been intensive insider selling. Hewlett-Packard saw insider selling last time in June.

Conclusion

There have been three different insiders selling their Apple shares and there have not been any insiders buying the shares during the past 30 days. All three of these insiders decreased their holding by more than 10%. Apple has an insider ownership of 0.04%. The stock is trading at a P/E ratio of 11.53 and a forward P/E ratio of 10.87. Apple has a book value of $134.28 per share and the stock has a dividend yield of 2.64%. Before entering short the Apple 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: 3 Insiders Are Selling Apple