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%.
Marketo (MKTO) provides cloud-based marketing software platform that enables organizations to engage in modern relationship marketing in the United States.
Insider selling during the last 30 days
Here is a table of Marketo'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|
|Sanjay Dholakia||SVP||Dec 12||13,000||Yes||48,119 shares||21.3%|
|Frederick Ball||CFO||Dec 12||10,000||Yes||20,000 shares||33.3%|
|William Binch||SVP||Dec 12||65,000||Yes||0 shares + 83,921 options||43.6%|
|Jason Holmes||SVP||Dec 12||15,000||Yes|
50,000 shares + 142,500 options
|Phillip Fernandez||CEO||Nov 25-26||10,000||Yes||536,514 shares||1.8%|
There have been 113,000 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 Marketo's insider-trading activity by calendar month.
|Month||Insider selling / shares||Insider buying / shares|
There have been 5,510,540 shares sold and there have been zero shares purchased by insiders since May 2013. Marketo had its IPO on May 17, 2013 at a price of $13.00 per share.
Marketo reported the third-quarter financial results on October 24 with the following highlights:
|Net loss||$10.0 million|
Marketo's guidance is as follows:
|Revenue||$26.2-$26.7 million||$93.9-$94.4 million|
|GAAP net loss||$0.32-$0.34 per share||$1.77-$1.81 per share|
Marketo's competitors include Responsys (MKTG). Here is a table comparing these two companies.
There have been five different insiders selling Marketo and there have not been any insiders buying Marketo during the last 30 days. Three of these five insiders decreased their holdings by more than 10%. Marketo has an insider ownership of 0.40%.
Before entering short Marketo, I would like to get a bearish confirmation from the Point and Figure chart. The three main reasons for the proposed short entry are relatively high P/S ratio, negative earnings, and the intensive insider-selling activity.