Insiders Are Selling Synnex

Nov. 2.13 | About: SYNNEX Corporation (SNX)

In this article, I will feature one business services company 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%.

Synnex Corporation (NYSE:SNX) provides distribution and business process outsourcing services to resellers, retailers, and original equipment manufacturers primarily in North America.

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Insider selling during the last 30 days

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

Name Title Trade Date Shares Sold Rule 10b5-1 Current Ownership Decrease In Ownership
Silver Star Developments 10% Owner Oct 1-31 317,488 No 5,551,764 shares 5.4%
Dwight Steffensen Director Oct 4 10,000 No 5,707 shares 63.7%
Simon Leung SVP Oct 1 4,246 No 19,330 shares + 2,661 options 16.2%
Peter Larocque President Oct 1 15,000 No 44,916 shares + 3,983 options 23.5%
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There have been 346,734 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 Synnex' insider-trading activity by calendar month.

Month Insider selling / shares Insider buying / shares
October 2013 346,734 0
September 2013 51,544 0
August 2013 3,000 0
July 2013 3,000 0
June 2013 3,000 0
May 2013 3,000 0
April 2013 5,508 0
March 2013 0 0
February 2013 2,000 0
January 2013 27,000 0
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There have been 444,786 shares sold and there have been zero shares purchased by insiders this year. The month of October has seen the most insider selling.

Financials

Synnex reported the fiscal 2013 third-quarter, which ended August 31, financial results on September 25 with the following highlights:

Revenue $2.7 billion
Net income $46.6 million
Cash $153.9 million
Debt $233.3 million
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Outlook

Synnex' guidance for the fiscal 2013 fourth quarter is as follows:

Revenue $2.925-$3.025 billion
Net income $43.0-$44.4 million
Diluted EPS $1.14-$1.18
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Competition

Synnex' competitors include Arrow Electronics (NYSE:ARW), Ingram Micro (NYSE:IM), and Tech Data (NASDAQ:TECD). Here is a table comparing these companies.

Company SNX ARW IM TECD
Market Cap: 2.27B 4.81B 3.64B 1.96B
Employees: 14,000 16,500 20,800 N/A
Qtrly Rev Growth (yoy): 0.06 0.03 0.12 0.05
Revenue: 10.55B 20.52B 42.10B 25.36B
Gross Margin: 0.06 0.13 0.06 0.05
EBITDA: 271.68M 842.30M 672.56M 356.71M
Operating Margin: 0.02 0.04 0.01 0.01
Net Income: 154.39M 446.13M 299.73M 214.59M
EPS: 3.12 4.14 1.93 5.48
P/E: 19.67 11.59 12.02 9.47
PEG (5 yr expected): 1.49 0.96 0.86 1.32
P/S: 0.22 0.23 0.09 0.08
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Synnex has the highest P/E ratio among these four companies.

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

Company Insider buying / shares Insider selling / shares
ARW 0 250,863
IM 0 992,026
TECD 0 42,400
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Only Synnex has seen intensive insider selling during the past 30 days.

Conclusion

There have been four different insiders selling Synnex and there have not been any insiders buying Synnex during the past 30 days. Three of these four insiders decreased their holdings by more than 10%. Synnex has an insider ownership of 17.50%.

Synnex is trading at a P/E ratio of 19.67 and a forward P/E ratio of 13.20. Synnex has a book value of $36.96 per share.

Before entering short Synnex, I would like to get a bearish confirmation from the Point and Figure chart. The two main reasons for the proposed short entry are relatively high P/E ratio and 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.