Linear Technology: 4 Different Insiders Have Sold Shares This Year

Jan.24.14 | About: Linear Technology (LLTC)

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%.

Linear Technology Corporation (NASDAQ:LLTC) designs, manufactures, and markets a line of analog integrated circuits worldwide.

Click to enlarge

Insider selling during the last 30 days

Here is a table of Linear Technology'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
Donald Paulus VP Jan 21 30,000 No 93,896 shares + 52,000 options 17.1%
Paul Coghlan CFO Jan 22 10,000 No 478,783 shares + 95,000 options 1.7%
Alexander McCann COO Jan 17 27,745 No 86,357 shares 24.3%
David Quarles VP Jan 17 2,000 No 59,980 shares 3.2%
Click to enlarge

There have been 69,745 shares sold by insiders during the last 30 days.

Insider selling by calendar month

Here is a table of Linear Technology's insider-trading activity by calendar month.

Month Insider selling / shares Insider buying / shares
January 2014 69,745 0
December 2013 0 0
November 2013 132,821 0
October 2013 73,739 0
September 2013 0 0
August 2013 103,000 0
July 2013 103,739 0
June 2013 0 0
May 2013 124,232 0
April 2013 5,739 0
March 2013 20,000 0
February 2013 487,561 0
January 2013 47,798 0
Click to enlarge

There have been 1,168,374 shares sold, and there have been zero shares purchased by insiders since January 2013.

Financials

Linear Technology reported the fiscal 2014 second-quarter, which ended December 29, financial results on January 14 with the following highlights:

Revenue $334.6 million
Net income $104.8 million
Cash $1.7 billion
Debt $837.6 million
Click to enlarge

Outlook

Linear Technology is forecasting revenues to grow sequentially by 3% to 6% in the fiscal third quarter.

Competition

Linear Technology's competitors include Analog Devices (NASDAQ:ADI), Maxim Integrated Products (NASDAQ:MXIM), and Texas Instruments (NASDAQ:TXN). Here is a table comparing these companies.

Company LLTC ADI MXIM TXN
Market Cap: 10.75B 15.47B 8.09B 48.47B
Employees: 4,306 9,100 9,019 34,151
Qtrly Rev Growth (yoy): 0.10 -0.02 -0.06 -0.04
Revenue: 1.32B 2.63B 2.40B 12.16B
Gross Margin: 0.75 0.64 0.61 0.51
EBITDA: 645.12M 893.60M 788.78M 3.98B
Operating Margin: 0.45 0.30 0.24 0.23
Net Income: 425.53M 673.49M 427.54M 1.88B
EPS: 1.78 2.14 1.45 1.69
P/E: 25.75 23.22 19.78 26.22
PEG (5 yr expected): 2.10 2.03 2.47 1.97
P/S: 8.47 5.95 3.39 4.02
Click to enlarge

Linear Technology has the highest P/S ratio among these four companies.

Here is a table of these competitors' insider-trading activities during the last 12 months.

Company Insider buying / shares Insider selling / shares
ADI 0 1,145,469
MXIM

0

559,313
TXN 0 4,296,925
Click to enlarge

Analog Devices has also seen intensive insider selling during the last 30 days.

Conclusion

There have been four different insiders selling Linear Technology, and there have not been any insiders buying Linear Technology during the last 30 days. Two of these four insiders decreased their holdings by more than 10%. Linear Technology has an insider ownership of 0.80%.

Before going short Linear Technology, 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.

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.