Insiders Are Selling Apple

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 |  About: Apple Inc. (AAPL), Includes: BBRY, GOOG, HPQ
by: Markus Aarnio

In this article, I will feature one consumer goods 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%.

Apple (NASDAQ:AAPL) designs, manufactures, and markets mobile communication and media devices, personal computers, and portable digital music players worldwide.

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Insider selling during the last 30 days

Here is a table of Apple'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
Luca Maestri VP Nov 5 2,490 Yes 0 shares 100%
Daniel Riccio SVP Oct 31 1,997 Yes 1,996 shares 50.0%
Jeffrey Williams SVP Oct 16 1,843 Yes

317 shares

85.3%
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There have been 6,330 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 Apple's insider-trading activity by calendar month.

Month Insider selling / shares Insider buying / shares
November 2013 2,490 0
October 2013 3,840 0
September 2013 12,314 0
August 2013 66,057 0
July 2013 79,734 0
June 2013 73,991 0
May 2013 0 0
April 2013 2,174 0
March 2013 0 0
February 2013 0 0
January 2013 0 0
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There have been 240,600 shares sold and there have been zero shares purchased by insiders this year.

Financials

Apple reported the fiscal 2013 full-year, which ended September 28, financial results on October 28 with the following highlights:

Revenue $170.9 billion
Net income $37.0 billion
Cash and investments $146.8 billion
Debt $17.0 billion
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Outlook

On October 28, Apple provided the following guidance for its fiscal 2014 first quarter:

Revenue $55-$58 billion
Gross margin 36.5-37.5 percent
Operating expenses $4.4-$4.5 billion
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Competition

Apple's competitors include Google (NASDAQ:GOOG), Hewlett-Packard Company (NYSE:HPQ), and BlackBerry (NASDAQ:BBRY). Here is a table comparing these companies.

Company AAPL BBRY GOOG HPQ
Market Cap: 464.39B 3.36B 338.42B 49.49B
Employees: 80,300 12,700 46,421 331,800
Qtrly Rev Growth (yoy): 0.04 -0.45 0.12 -0.08
Revenue: 170.91B 10.05B 57.39B 113.13B
Gross Margin: 0.38 0.27 0.57 0.24
EBITDA: 55.76B 156.00M 17.60B 13.58B
Operating Margin: 0.29 -0.15 0.24 0.08
Net Income: 37.04B -938.00M 11.74B -3.16B
EPS: 39.75 -1.80 36.75 -1.63
P/E: 13.00 N/A 27.58 N/A
PEG (5 yr expected): 0.84 0.77 1.41 -1.60
P/S: 2.74 0.34 5.95 0.44
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Apple has the second-highest P/S ratio among these four companies.

Here is a table of these competitors' insider-trading activities during the last six months.

Company Insider buying / shares Insider selling / shares
GOOG 0 2,589,209
HPQ 0 61,000
BBRY 0 299,164
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Google has also seen intensive insider selling during the past 30 days.

Conclusion

There have been three different insiders selling Apple and there have not been any insiders buying Apple during the past 30 days. All three of these insiders decreased their holdings by more than 10%. Apple has an insider ownership of 0.04%. The three last times that Apple saw intensive insider selling was in August 2013, July 2013, and April 2012.

Apple is trading at a P/E ratio of 13.00 and a forward P/E ratio of 10.85. Apple has a book value of $136.65 per share and the stock has a dividend yield of 2.38%.

Before entering short the Apple stock, 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.