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

In this article, I will feature one tech stock that has 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%.

Oracle Corporation (NYSE:ORCL) develops, manufactures, markets, hosts, and supports database and middleware software, applications software and hardware systems.

(click to enlarge)

Insider selling during the last 30 days

Here is a table of Oracle's insider-trading activity during the last 30 days by insider.

NameTitleTrade DateShares SoldCurrent Ownership (shares+options)Decrease In Ownership
Thomas KurianEVPSept 27400,00032,327 shares + 1,550,000 options20.2%
Dorian DaleySVPSept 25100,0005,000 shares + 50,000 options64.5%
Michael BoskinDirectorSept 1630,0005,000 shares85.7%
Hector Garcia-MolinaDirectorSept 162,5005,000 shares + 35,000 options5.9%

There have been 532,500 shares sold by insiders during the last 30 days.

Insider selling by calendar month

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

MonthInsider selling / sharesInsider buying / shares
September 20131,032,5000
August 201332,5000
July 20132,962,5000
June 2013552,5000
May 20132,9090
April 201352,9170
March 2013527,9170
February 20132,9170
January 201342,9170

There have been 5,209,577 shares sold and there have been zero shares purchased by insiders this year.

Financials

Oracle reported the fiscal 2014 first-quarter, which ended August 31, financial results on September 18, with the following highlights:

Revenue$8.4 billion
Net income$2.2 billion
Cash$39.1 billion
Debt$24.1 billion

Outlook

Oracle's guidance for the fiscal 2014 second quarter is as follows:

  • New software license and cloud subscription revenue growth is expected to range from negative 4 to positive 6 in constant currency and negative 6 to positive 4 in reported dollars. Hardware product revenue is expected to range from negative 9% to positive 1% in constant dollars and negative 11% to negative 1% in reported dollars. As a result, total revenue growth on both GAAP and non-GAAP basis is expected to range from 1% to 4% in constant dollars and negative 1 to positive 2 in U.S. dollars.
  • Non-GAAP EPS is expected to be somewhere between $0.65 and $0.70 in constant dollars, $0.64 to $0.69 in reported dollars. GAAP EPS is expected to be $0.51 to $0.56 in constant dollars, and $0.50 to $0.55 in reported dollars.

Competition

Oracle's enterprise software and hardware offerings compete directly with some offerings from some of the largest and most competitive companies in the world, including Microsoft (NASDAQ:MSFT), International Business Machines (NYSE:IBM), Intel (NASDAQ:INTC), Hewlett-Packard (NYSE:HPQ) and SAP AG (NYSE:SAP) and smaller companies like salesforce.com (NYSE:CRM), as well as many others.

Here is a table comparing these companies.

CompanyCRMMSFTORCLSAPIBM
Market Cap:31.49B277.39B151.35B87.58B199.38B
Employees:9,80099,000120,00064,937434,246
Qtrly Rev Growth (yoy):0.310.100.020.04-0.03
Revenue:3.47B77.85B37.37B21.54B102.38B
Gross Margin:0.770.740.810.720.49
EBITDA:72.43M30.10B16.26B7.38B26.23B
Operating Margin:-0.050.340.390.290.21
Net Income:-232.26M21.86B11.08B3.84B15.91B
EPS:-0.412.582.333.2114.09
P/E:N/A12.9114.2722.8812.92
PEG (5 yr expected):5.601.411.091.331.10
P/S:9.073.564.054.071.95

Oracle has the second-lowest quarterly revenue growth among these five companies.

Here is a table of these competitors' insider-trading activities this year.

CompanyInsider buying / sharesInsider selling / shares
MSFT060,339,723
IBM1,000231,553
INTC02,316,214
HPQ049,000
CRM01,204,821

Salesforce.com has also seen intensive insider selling during the past 30 days.

Conclusion

There have been four different insiders selling Oracle and there have not been any insiders buying Oracle during the past 30 days. Three of these four insiders decreased their holdings by more than 10%. Oracle has an insider ownership of 23.68%.

Oracle is trading at a P/E ratio of 14.27 and a forward P/E ratio of 10.52. The company has a book value of $9.45 per share and the stock has a dividend yield of 1.45%.

Oracle has a $24 price target from the Point and Figure chart. I believe there is an opportunity for a short entry with the $24 price target. I would place a stop loss at $35, which is the six-month high. The two main reasons for the proposed short entry are bearish Point and Figure chart and the intensive insider selling activity.

Source: Insiders Are Selling Oracle