Insiders Are Selling Qualcomm

Nov. 7.13 | About: Qualcomm Inc. (QCOM)

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%.

Qualcomm (NASDAQ:QCOM) designs, develops, manufactures, and markets digital telecommunications products and services.

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Insider selling during the last 30 days

Here is a table of Qualcomm'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
Paul Jacobs CEO Oct 22-Nov 1 69,842 Yes 1,280,851 shares + 210,447 options 4.5%
Margaret Johnson EVP Nov 1 6,000 Yes 24,129 shares + 9,724 options 15.1%
Derek Aberle EVP Nov 4 3,750 Yes 2,451 shares + 3,750 options 37.7%
Matthew Grob EVP Oct 7-Nov 1 30,700 Yes 14,484 shares + 37,500 options 37.1%
Cristiano Amon EVP Oct 31 7,000 Yes 287 shares + 14,000 options 32.9%
Steven Mollenkopf COO Oct 11 4,917 Yes 21,540 shares + 4,917 options 15.7%
Steven Altman Vice Chairman Oct 7 9,083 Yes 80,113 shares + 9,084 options 9.2%
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There have been 131,292 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 Qualcomm's insider-trading activity by calendar month.

Month Insider selling / shares Insider buying / shares
November 2013 56,592 0
October 2013 165,009 0
September 2013 379,485 0
August 2013 182,869 0
July 2013 193,088 0
June 2013 144,783 0
May 2013 335,723 0
April 2013 429,250 0
March 2013 412,241 0
February 2013 304,057 0
January 2013 626,003 0
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There have been 3,229,100 shares sold and there have been zero shares purchased by insiders this year.

Financials

Qualcomm reported the fiscal 2013 full-year, which ended September 29, financial results on November 6 with the following highlights:

Revenue $24.9 billion
Net income $6.9 billion
Cash $29.4 billion
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Outlook

Qualcomm's guidance is as follows:

  Q1/FY14 FY14
Revenue $6.3-$6.9 billion $26.0-$27.5 billion
GAAP Diluted EPS $0.92-$1.02 $4.25-$4.45
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(Source: Earnings presentation)

Competition

Qualcomm's competitors include Broadcom (BRCM) and Texas Instruments (NASDAQ:TXN). Here is a table comparing these companies.

Company BRCM QCOM TXN
Market Cap: 15.03B 118.37B 45.86B
Employees: 11,300 26,600 34,151
Qtrly Rev Growth (yoy): 0.03 0.35 -0.04
Revenue: 8.19B 23.26B 12.16B
Gross Margin: 0.50 0.62 0.51
EBITDA: 1.31B 8.09B 3.83B
Operating Margin: 0.11 0.30 0.21
Net Income: 507.00M 6.60B 1.88B
EPS: 0.87 3.77 1.69
P/E: 30.52 18.33 24.73
PEG (5 yr expected): 1.25 0.91 2.41
P/S: 1.83 5.09 3.77
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Qualcomm has the highest P/S ratio among these three companies.

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

Company Insider buying / shares Insider selling / shares
BRCM 0 1,777,885
TXN 0 4,284,375
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Texas Instruments has also seen intensive insider selling during the past 30 days.

Conclusion

There have been seven different insiders selling Qualcomm and there have not been any insiders buying Qualcomm during the past 30 days. Five of these seven insiders decreased their holdings by more than 10%. Qualcomm has an insider ownership of 1.25%.

Qualcomm is trading at a P/E ratio of 30.52 and a forward P/E ratio of 14.00. The company has a book value of $21.76 per share and the stock has a dividend yield of 2.03%.

Before entering short Qualcomm, 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/S 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.