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%.
SanDisk Corporation (SNDK) designs, develops, manufactures, and markets flash storage card products that are used in various consumer electronics products.
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|
|Sanjay Mehrotra||CEO||Jan 10||75,000||Yes||40,675 shares + 157,875 options||27.4%|
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|
There have been 1,380,693 shares sold, and there have been zero shares purchased by insiders since January 2013.
SanDisk reported the full-year 2013 financial results on January 22 with the following highlights:
|GAAP net income||$1.0 billion|
SanDisk's guidance is as follows:
|Revenue||$1.45-$1.525 billion||$6.4-$6.8 billion|
|Non-GAAP gross margin||47%-49%||45%-48%|
|Qtrly Rev Growth (yoy):||0.12||0.06||0.24||1.20|
|PEG (5 yr expected):||0.97||N/A||N/A||1.96|
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|
Micron has also seen intensive insider selling during the last 30 days.
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.