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%.
Ambarella (AMBA) develops semiconductor processing solutions for video that enable high-definition video capture, sharing, and display.
Insider selling during the last 30 days
Here is a table of Ambarella'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|
|Lip-Bu Tan||Director||Dec 17||1,408||No||784,838 shares||0.2%|
|George Laplante||CFO||Dec 10||60,000||Yes||59,553 shares + 168,532 options||20.8%|
|Didier LeGall||EVP||Dec 2||21,083||Yes||162,575 shares||11.5%|
|Leslie Kohn||CTO||Dec 2||70,000||Yes||1,131,372 shares||5.8%|
|Fermi Wang||CEO||Dec 2||72,500||Yes||771,166 shares||8.6%|
There have been 224,991 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 Ambarella's insider-trading activity by calendar month.
|Month||Insider selling / shares||Insider buying / shares|
There have been 1,404,054 shares sold and there have been zero shares purchased by insiders this year.
Ambarella reported the fiscal 2014 third-quarter, which ended October 31, financial results on December 5 with the following highlights:
|Net income||$9.1 million|
Ambarella's guidance for the fiscal 2014 fourth quarter is as follows:
|Non-GAAP gross margin||62.0%-64.0%|
|Non-GAAP net income||$5.0-$6.5 million|
Ambarella has the highest P/S ratio among these four companies.
Here is a table of these competitors' insider-trading activities this year.
|Company||Insider buying / shares||Insider selling / shares|
Only Ambarella has seen intensive insider selling during the last 30 days.
There have been five different insiders selling Ambarella and there have not been any insiders buying Ambarella during the last 30 days. Two of these five insiders decreased their holdings by more than 10%. Ambarella has an insider ownership of 7.30%.
Ambarella is trading at a P/E ratio of 30.30 and a forward P/E ratio of 21.60. Before entering short Ambarella, 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.