Ultra Clean: 4 Different Insiders Have Sold Shares This Year

Jan.24.14 | About: Ultra Clean (UCTT)

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%.

Ultra Clean Holdings (NASDAQ:UCTT) designs, develops, prototypes, engineers, manufactures, and tests subsystems tailored to specific steps in the semiconductor manufacturing process and manufacturing processes in other industries.

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Insider selling during the last 30 days

Here is a table of Ultra Clean'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
AIT Holding 10% Owner Dec 27-Jan 16 519,001 No 3,053,970 shares 14.5%
Lavi Lev SVP Jan 14 2,986 Yes 46,999 shares 6.0%
Clarence Granger CEO Jan 14 100,000 Yes 319,751 shares + 20,834 options 22.7%
Bruce Wier SVP Jan 10-14 38,057 Yes 75,510 shares 33.5%
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There have been 660,044 shares sold by insiders during the last 30 days. Lavi Lev, Clarence Granger, and Bruce Wier sold shares pursuant to a Rule 10b5-1 plan. 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 Ultra Clean's insider-trading activity by calendar month.

Month Insider selling / shares Insider buying / shares
January 2014 606,659 0
December 2013 385,120 0
November 2013 282,949 0
October 2013 200,803 0
September 2013 0 0
August 2013 21,289 0
July 2013 338,399 0
June 2013 0 0
May 2013 0 0
April 2013 0 0
March 2013 3,868 0
February 2013 0 0
January 2013 0 0
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There have been 1,839,087 shares sold, and there have been zero shares purchased by insiders since January 2013. The month of January 2014 has seen the most insider selling.

Financials

Ultra Clean reported the third-quarter financial results on October 21 with the following highlights:

Revenue $107.2 million
Net income $2.0 million
Cash $65.9 million
Debt $56.5 million
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Outlook

Ultra Clean's fourth-quarter guidance is as follows:

Revenue $125-$127 million
Gross profit margin 16.5%-17%
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Competition

Ultra Clean's competitors include Air Products and Chemicals (NYSE:APD), and Flextronics (NASDAQ:FLEX). Here is a table comparing these companies.

Company UCTT APD FLEX
Market Cap: 324.91M 23.66B 4.69B
Employees: 1,480 20,900 149,000
Qtrly Rev Growth (yoy): 0.08 0.09 -0.03
Revenue: 401.49M 10.20B 23.38B
Gross Margin: 0.14 0.26 0.06
EBITDA: 14.42M 2.42B 949.84M
Operating Margin: 0.01 0.15 0.02
Net Income: -292.00K 991.10M 224.99M
EPS: -0.01 4.69 0.32
P/E: N/A 23.91 24.51
PEG (5 yr expected): 2.33 2.18 0.88
P/S: 0.81 2.32 0.20
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Ultra Clean has the second-highest P/S ratio among these three companies.

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

Company Insider buying / shares Insider selling / shares
APD 18,645 235,861
FLEX 15,000 777,066
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Only Ultra Clean has seen intensive insider selling during the last 30 days.

Conclusion

There have been four different insiders selling Ultra Clean, and there have not been any insiders buying Ultra Clean during the last 30 days. Three of these four insiders decreased their holdings by more than 10%. Ultra Clean has an insider ownership of 13.80%.

There are four analyst buy ratings, one neutral rating, and zero sell ratings with an average price target of $11.58. Before going short Ultra Clean, I would like to get a bearish confirmation from the Point and Figure chart. The two main reasons for the proposed short entry are bearish analyst price targets, 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.