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%.
Semtech Corporation (NASDAQ:SMTC) designs, develops, manufactures, and markets analog and mixed signal semiconductor products.
Insider selling during the last 30 days
Here is a table of Semtech'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|
|Mohan Maheswaran||CEO||Oct 1-21||6,000||Yes||145,662 shares||4%|
|James Kim||SVP||Oct 11||1,500||Yes||5,170 shares + 7,000 options||11%|
|James Lindstrom||Director||Oct 11||5,000||No||20,000 shares||20%|
|James Burra||Director||Oct 10||10,000||No||0 shares||100%|
There have been 22,500 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 Semtech's insider-trading activity by calendar month.
|Month||Insider selling / shares||Insider buying / shares|
There have been 566,375 shares sold and there have been zero shares purchased by insiders this year.
Semtech reported the fiscal 2014 second-quarter, which ended July 28, financial results on August 21 with the following highlights:
|Net income||$19.1 million|
Mohan Maheswaran, Semtech's President and Chief Executive Officer, commented on August 21:
We expect our Q3 results to be negatively impacted by both a reduction in demand and inventory corrections at several of our largest smartphone customers. We anticipate that this weakness will continue through most of the second half.
Semtech's third quarter of fiscal year 2014 outlook is as follows:
Semtech's P/S and P/E ratios are above the industry average.
Here is a table of these competitors' insider-trading activities this year.
|Company||Insider buying / shares||Insider selling / shares|
Analog Devices has also seen intensive insider selling during the past 30 days.
There have been four different insiders selling Semtech and there have not been any insiders buying Semtech during the past 30 days. Three of these four insiders decreased their holdings by more than 10%. Semtech has an insider ownership of 0.80%.
Semtech is trading at a P/E ratio of 32.94 and a forward P/E ratio of 15.41. The company has a book value of $11.10 per share.
Semtech has an $18 price target from the Point and Figure chart. I believe there is an opportunity for a short entry with the $18 price target. I would place a stop loss at $37.50, which is the 12-year high. The four main reasons for the proposed short entry are bearish Point and Figure chart, high P/E ratio, weak guidance, and the intensive insider selling activity.
Disclosure: I have no positions in any stocks mentioned, but may initiate a short position in SMTC over 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.