SanDisk: 4 Different Insiders Have Sold Shares This Year

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 |  About: SanDisk Corporation (SNDK)
by: Markus Aarnio

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%.

SanDisk Corporation (NASDAQ:SNDK) designs, develops, manufactures, and markets flash storage card products that are used in various consumer electronics products.

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Insider selling during the last 30 days

Here is a table of SanDisk'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
Steven Gomo Director Jan 30 10,000 No 7,377 shares 57.5%
Sumit Sadana SVP Jan 30 15,163 No 0 shares + 29,782 options 33.7%
Michael Marks Director Jan 28 10,000 No

27,184 shares

26.9%
Sanjay Mehrotra CEO Jan 10 75,000 Yes 40,675 shares + 157,875 options 27.4%
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There have been 110,163 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 SanDisk's insider-trading activity by calendar month.

Month Insider selling / shares Insider buying / shares
January 2014 110,163 0
December 2013 67,000 0
November 2013 123,514 0
October 2013 228,843 0
September 2013 79,000 0
August 2013 113,677 0
July 2013 38,000 0
June 2013 32,000 0
May 2013 170,231 0
April 2013 32,000 0
March 2013 197,000 0
February 2013 129,265 0
January 2013 60,000 0
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There have been 1,380,693 shares sold, and there have been zero shares purchased by insiders since January 2013.

Financials

SanDisk reported the full-year 2013 financial results on January 22 with the following highlights:

Revenue $6.2 billion
GAAP net income $1.0 billion
Cash $2.9 billion
Debt $2.0 billion
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Outlook

SanDisk's guidance is as follows:

Q1/2014 FY2014
Revenue $1.45-$1.525 billion $6.4-$6.8 billion
Non-GAAP gross margin 47%-49% 45%-48%
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Competition

SanDisk's competitors include Samsung (OTC:SSNLF), Hynix (OTC:HXSCL), and Micron (NASDAQ:MU). Here is a table comparing these companies.

Company SNDK SSNLF HXSCL MU
Market Cap: 15.67B 166.88B 22.86B 24.44B
Employees: 4,636 N/A N/A 30,900
Qtrly Rev Growth (yoy): 0.12 0.06 0.24 1.20
Revenue: 6.17B 205.82B 12.75B 11.28B
Gross Margin: 0.47 N/A N/A 0.26
EBITDA: 2.11B 47.02B N/A 3.11B
Operating Margin: 0.27 0.16 0.24 0.11
Net Income: 1.04B 27.42B 2.59B 1.82B
EPS: 4.34 209.52 18.20 1.66
P/E: 16.03 6.09 8.83 13.90
PEG (5 yr expected): 0.97 N/A N/A 1.96
P/S: 2.56 0.81 1.88 2.21
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SanDisk 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
SSNLF N/A N/A
HXSCL

N/A

N/A
MU 0 6,304,770
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Micron has also seen intensive insider selling during the last 30 days.

Conclusion

There have been four different insiders selling SanDisk, and there have not been any insiders buying SanDisk during the last 30 days. All four of these insiders decreased their holdings by more than 10%. SanDisk has an insider ownership of 0.24%.

Before going short SanDisk, 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.