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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.

(click to enlarge)

Insider selling during the last 30 days

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

NameTitleTrade DateShares SoldRule 10b5-1Current OwnershipDecrease In Ownership
Steven GomoDirectorJan 3010,000No7,377 shares57.5%
Sumit SadanaSVPJan 3015,163No0 shares + 29,782 options33.7%
Michael MarksDirectorJan 2810,000No

27,184 shares

26.9%
Sanjay MehrotraCEOJan 1075,000Yes40,675 shares + 157,875 options27.4%

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.

MonthInsider selling / sharesInsider buying / shares
January 2014110,1630
December 201367,0000
November 2013123,5140
October 2013228,8430
September 201379,0000
August 2013113,6770
July 201338,0000
June 201332,0000
May 2013170,2310
April 201332,0000
March 2013197,0000
February 2013129,2650
January 201360,0000

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

Outlook

SanDisk's guidance is as follows:

Q1/2014FY2014
Revenue$1.45-$1.525 billion$6.4-$6.8 billion
Non-GAAP gross margin47%-49%45%-48%

Competition

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

CompanySNDKSSNLFHXSCLMU
Market Cap:15.67B166.88B22.86B24.44B
Employees:4,636N/AN/A30,900
Qtrly Rev Growth (yoy):0.120.060.241.20
Revenue:6.17B205.82B12.75B11.28B
Gross Margin:0.47N/AN/A0.26
EBITDA:2.11B47.02BN/A3.11B
Operating Margin:0.270.160.240.11
Net Income:1.04B27.42B2.59B1.82B
EPS:4.34209.5218.201.66
P/E:16.036.098.8313.90
PEG (5 yr expected):0.97N/AN/A1.96
P/S:2.560.811.882.21

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.

CompanyInsider buying / sharesInsider selling / shares
SSNLFN/AN/A
HXSCL

N/A

N/A
MU06,304,770

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.

Source: SanDisk: 4 Different Insiders Have Sold Shares This Year