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:
- The stock was sold by three or more insiders within one month.
- The stock was not purchased by any insiders in the month of intensive selling.
- At least two sellers decreased their holdings by more than 10%.
Lam Research Corporation (NASDAQ:LRCX) designs, manufactures, markets, refurbishes, and services semiconductor processing equipment used in the fabrication of integrated circuits.
Insider selling during the last 30 days
Here is a table of Lam Research's insider-trading activity during the last 30 days by insider.
|Name||Title||Trade Date||Shares Sold||Rule 10b5-1||Current Ownership||Decrease In Ownership|
|Sarah O'Dowd||SVP||Oct 21||6,000||Yes||40,821 shares||12.8%|
|Stephen Newberry||Director||Sep 25-Oct 18||50,000||Yes||101,182 shares + 48,700 options||25.0%|
|Douglas Bettinger||CFO||Oct 14||7,372||Yes||42,801 shares||14.7%|
|Christine Heckart||Director||Oct 14||109||Yes||12,086 shares||0.9%|
There have been 63,481 shares sold by insiders during the last 30 days. More details about the Rule 10b5-1 trading plan can be found from this link.
Insider selling by calendar month
Here is a table of Lam Research's insider-trading activity by calendar month.
|Month||Insider selling / shares||Insider buying / shares|
There have been 414,197 shares sold and there have been zero shares purchased by insiders this year.
Lam Research reported the fiscal 2014 first-quarter, which ended September 29, financial results on October 23 with the following highlights:
|Net income||$85.5 million|
For the December 2013 quarter, Lam provided the following guidance on a non-GAAP basis:
- Shipments of approximately $1.125 billion plus or minus $30 million.
- Revenue of approximately $1.1 billion plus or minus $30 million.
- Gross margin of approximately 46.0% plus or minus 1.0%.
- Operating margin as a percent of revenue of approximately 18.5% plus or minus 1.0%.
- Earnings per share of approximately $1.02 plus or minus $0.05, assuming a diluted share count of 174 million.
Lam Research's competitors include Applied Materials (NASDAQ:AMAT). Here is a table comparing these two companies.
Lam Research is trading at a lower P/S ratio than its direct competitor. In Applied Materials, there have been 1,963,113 shares sold and there have been zero shares purchased by insiders this year. Only Lam Research has seen intensive insider selling during the past 30 days.
There have been four different insiders selling Lam Research and there have not been any insiders buying Lam Research during the past 30 days. Three of these four insiders decreased their holdings by more than 10%. Lam Research has an insider ownership of 0.30%.
Lam Research is trading at a P/E ratio of 82.98 and a forward P/E ratio of 12.23. The company has a book value of $27.62 per share. Before entering short Lam Research, 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.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.