Insiders Are Selling Google

Nov.11.13 | About: Alphabet Inc. (GOOG)

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%.

Google (NASDAQ:GOOG), a technology company, builds products and provides services to organize the information and make it universally accessible and useful.

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Insider selling during the last 30 days

Here is a table of Google'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
Nikesh Arora SVP Oct 30-Nov 6 27,635 Yes 51,408 shares + 120,761 options 13.8%
Sergey Brin Co-Founder Nov 5 83,334 Yes 23,601,148 shares 0.4%
Eric Schmidt Executive Chairman Oct 25 46,315 Yes

5,141,383 shares + 181,840 options

0.9%
Shirley Tilghman Director Oct 22 1,000 No 5,173 shares + 1,000 options 13.9%
Lawrence Page CEO Oct 14-17 83,334 Yes 24,273,584 shares 0.3%
John Doerr Director Oct 15 4,731 Yes 1,330,146 shares 0.4%
Patrick Pichette CFO Oct 14 145 Yes 54,009 shares + 99,579 options 0.1%
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There have been 246,494 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 Google's insider-trading activity by calendar month.

Month Insider selling / shares Insider buying / shares
November 2013 84,981 0
October 2013 244,847 0
September 2013 436,628 0
August 2013 435,598 0
July 2013 435,280 0
June 2013 436,506 0
May 2013 516,419 0
April 2013 437,927 0
March 2013 437,659 0
February 2013 484,328 0
January 2013 398,007 0
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There have been 4,348,180 shares sold and there have been zero shares purchased by insiders this year.

Financials

Google reported the third-quarter financial results on October 17 with the following highlights:

Revenue $14.9 billion
Net income $3.0 billion
Cash $56.5 billion
Debt $5.2 billion
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(Source: Earnings presentation)

Competition

Google's competitors include Facebook (NASDAQ:FB), and Yahoo! (NASDAQ:YHOO). Here is a table comparing these companies.

Company GOOG FB YHOO Industry Average (Internet Information Providers)
Market Cap: 339.44B 115.50B 34.50B 3.33B
Employees: 46,421 5,794 11,700 3.49K
Qtrly Rev Growth (yoy): 0.12 0.60 -0.05 0.56
Revenue: 57.39B 6.87B 4.76B 4.59B
Gross Margin: 0.57 0.76 0.70 0.61
EBITDA: 17.60B 3.26B 1.19B 2.06B
Operating Margin: 0.24 0.34 0.14 0.11
Net Income: 11.74B 1.01B 1.29B N/A
EPS: 36.75 0.39 1.16 0.69
P/E: 27.65 121.56 28.58 31.56
PEG (5 yr expected): 1.41 1.92 1.79 1.41
P/S: 5.87 16.82 7.03 5.92
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Google's P/S ratio is in line with the industry average.

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

Company Insider buying / shares Insider selling / shares
FB 0 13,805,626
YHOO 0 52,580,176
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Facebook has also seen intensive insider selling during the past 30 days.

Conclusion

There have been seven different insiders selling Google and there have not been any insiders buying Google during the past 30 days. Two of these seven insiders decreased their holdings by more than 10%.

Google is trading at a P/E ratio of 27.65 and a forward P/E ratio of 19.48. The company has a book value of $248.76 per share.

Before entering short Google, 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.