Seeking Alpha
Long/short equity, insider ownership
Profile| Send Message|
( followers)  

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%.

Stamps.com (NASDAQ:STMP) provides Internet-based postage solutions.

(click to enlarge)

Insider selling during the last 30 days

Here is a table of Stamps.com's insider-trading activity during the last 30 days by insider.

NameTitleTrade DateShares SoldRule 10b5-1Current OwnershipDecrease In Ownership
James BortnakCo-PresidentDec 202,777Yes0 shares + 11,703 options19.2%
Ken McBrideChairman and CEODec 206,944Yes5,448 shares + 34,723 options14.7%
John ClemChief Product & Strategy OfficerNov 272,777No1,543 shares + 16,667 options13.2%
JP LeonVPNov 266,400No5,951 shares + 12,594 options25.7%

There have been 18,898 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 Stamps.com's insider-trading activity by calendar month.

MonthInsider selling / sharesInsider buying / shares
December 20139,7210
November 201332,0940
October 2013120,3760
September 2013131,6070
August 2013199,0430
July 201312,7780
June 201319,8090
May 201337,7780
April 201371,5560
March 201300
February 20136,7770
January 20132,7780

There have been 644,317 shares sold and there have been zero shares purchased by insiders this year.

Financials

Stamps.com reported the third-quarter financial results on October 23 with the following highlights:

Revenue$31.2 million
Net income$8.8 million
Cash$83.5 million

STMP Revenue (Quarterly YoY Growth) Chart

STMP Revenue (Quarterly YoY Growth) data by YCharts

Stamps.com's revenue growth has been slowing down.

Outlook

Stamps.com's 2013 full-year guidance is as follows:

Revenue$125-$135 million
GAAP net income$1.93-$2.13 per share
Non-GAAP net income$2.20-$2.40 per share

Competition

Stamps.com's competitors include Pitney Bowes (NYSE:PBI). Here is a table comparing these two companies.

CompanySTMPPBI
Market Cap:691.17M4.66B
Employees:23327,400
Qtrly Rev Growth (yoy):0.08-0.01
Revenue:125.53M4.84B
Gross Margin:0.770.49
EBITDA:34.30M933.03M
Operating Margin:0.250.14
Net Income:34.58M348.43M
EPS:2.140.81
P/E:20.0628.63
PEG (5 yr expected):0.90-1.07
P/S:5.500.96

Stamps.com is trading at a higher P/S ratio than Pitney Bowes. In Pitney Bowes, there have been zero shares sold and there have been 91,000 shares purchased by insiders this year. Only Stamps.com has seen intensive insider selling during the last 30 days.

Conclusion

There have been four different insiders selling Stamps.com and there have not been any insiders buying Stamps.com during the last 30 days. All four of these insiders decreased their holdings by more than 10%. Stamps.com has an insider ownership of 1.80%.

Stamps.com has a $34 price target from the Point and Figure chart. I believe there is an opportunity for a short entry with the $34 price target. I would place a stop loss at $49, which is the 13-year high. The four main reasons for the proposed short entry are bearish Point and Figure chart, relatively high P/S ratio, weak revenue growth, and the intensive insider-selling activity.

(click to enlarge)

Source: Stamps.com: 4 Different Insiders Have Sold Shares During The Last 30 Days