TW Telecom: 4 Different Insiders Have Sold Shares During The Last 30 Days

Feb. 5.14 | About: tw telecom (TWTC)

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%.

TW Telecom (NASDAQ:TWTC) engages in the provision of managed network services in the United States.

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Insider selling during the last 30 days

Here is a table of TW Telecom'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
Mark Peters CFO Jan 27-29 86,341 Yes 335,532 shares 20.5%
John Blount COO Jan 27-29 109,249 Yes 445,068 shares 19.7%
Kevin Mooney Director Jan 30 16,000 Yes 62,163 shares 20.5%
Gregory Attorri Director Jan 27-31 6,750 Yes 46,030 shares 12.8%
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There have been 218,340 shares sold by insiders during the last 30 days. All these shares were sold pursuant to a Rule 10b5-1 plan.

SEC Rule 10b5-1 is a regulation enacted by the United States Securities and Exchange Commission (SEC) in 2000. The SEC states that Rule 10b5-1 was enacted in order to resolve an unsettled issue over the definition of insider trading, which is prohibited by SEC Rule 10b-5. After Rule 10b5-1 was enacted, the SEC staff publicly took the position that canceling a planned trade made under the safe harbor does not constitute insider trading, even if the person was aware of the inside information when canceling the trade. This staff interpretation raises the possibility that executives can exploit this safe harbor by entering into 10b5-1 trading plans before they have inside information while retaining the option to later cancel those plans based on inside information.

For example, a CEO of a company could call a broker on January 1 and enter into a plan to sell a particular quantity of shares of his company's stock on March 1, find out terrible news about his company on February 1 that will not become public until April 1, and then go forward with the March 1 sale anyway, saving himself from losing money when the bad news becomes public. Under the terms of Rule 10b5-1(b) this is insider trading because the CEO "was aware" of the inside information when he made the trade. But he can assert an affirmative defense under Rule 10b5-1(c), because he planned the trade before he learned the inside information.

In general, it is a safer way for an insider to sell shares pursuant to a Rule 10b5-1 trading plan than without it.

Insider selling by calendar month

Here is a table of TW Telecom's insider-trading activity by calendar month.

Month Insider selling / shares Insider buying / shares
January 2014 284,505 0
December 2013 0 0
November 2013 25,000 0
October 2013 47,000 0
September 2013 19,500 0
August 2013 25,000 0
July 2013 2,000 0
June 2013 0 0
May 2013 644,653 0
April 2013 729,847 0
March 2013 0 0
February 2013 1,422,360 0
January 2013 31,750 0
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There have been 3,231,615 shares sold, and there have been zero shares purchased by insiders since January 2013.


TW Telecom reported the third-quarter financial results on November 6 with the following highlights:

Revenue $393.2 million
Net loss $9.4 million
Cash $569.5 million
Debt $1.8 billion
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(Source: Earnings presentation)


TW Telecom's competitors include AT&T (NYSE:T), Verizon Communications (NYSE:VZ), and CenturyLink (NYSE:CTL). Here is a table comparing these companies.

Market Cap: 4.15B 169.01B 133.33B 16.77B
Employees: 3,147 243,360 176,800 46,700
Qtrly Rev Growth (yoy): 0.07 0.02 0.03 -0.01
Revenue: 1.54B 128.75B 120.55B 18.14B
Gross Margin: 0.58 0.60 0.63 0.61
EBITDA: 506.87M 48.87B 48.57B 7.46B
Operating Margin: 0.14 0.24 0.27 0.16
Net Income: 37.56M 18.25B 11.50B -245.00M
EPS: 0.25 3.39 4.00 -0.40
P/E: 114.86 9.54 11.66 N/A
PEG (5 yr expected): 10.30 2.04 1.52 8.31
P/S: 2.75 1.35 1.14 0.94
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TW Telecom 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
T 10,000 31,091
VZ 0 31,867
CTL 1,500 28,558
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Only TW Telecom has seen intensive insider selling during the last 30 days.


There have been four different insiders selling TW Telecom, and there have not been any insiders buying TW Telecom during the last 30 days. All four of these insiders decreased their holdings by more than 10%. TW Telecom has an insider ownership of 3.01%.

Before going short TW Telecom, 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.