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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%.

International Business Machines Corporation (NYSE:IBM) provides information technology products and services worldwide.

(click to enlarge)

Insider selling during the last 30 days

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

NameTitleTrade DateShares SoldRule 10b5-1Current OwnershipDecrease In Ownership
Michael RhodinSVPFeb 114,500No22,594 shares16.6%
Rodney AdkinsSVPFeb 1011,731No0 shares100%
James KavanaughVPFeb 105,650No15,351 shares26.9%
Joan SperoDirectorFeb 64,000No

1,000 shares

80.0%

There have been 25,881 shares sold by insiders during the last 30 days.

Insider selling by calendar month

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

MonthInsider selling / sharesInsider buying / shares
February 201425,8810
January 201400
December 201300
November 201399,3310
October 201300
September 201300
August 201301,000
July 201300
June 201300
May 201320,8850
April 201300
March 201300
February 2013133,1810
January 201377,4870

There have been 356,765 shares sold, and there have been 1,000 shares purchased by insiders since January 2013.

Financials

IBM reported the full-year 2013 financial results on January 21 with the following highlights:

Revenue$99.8 billion
Net income$16.5 billion
Cash$11.1 billion
Debt$39.7 billion

IBM Revenue (<a href=

IBM's revenues peaked in early 2012.

Outlook

IBM expects to deliver full-year 2014 GAAP earnings per share of at least $17.00, and operating (non-GAAP) earnings per share of at least $18.00.

(click to enlarge)

(Source: Earnings presentation)

Competition

IBM's competitors include Accenture (NYSE:ACN), Hewlett-Packard (NYSE:HPQ), and Microsoft (NASDAQ:MSFT). Here is a table comparing these companies.

CompanyIBMACNHPQMSFTIndustry Average (Information Technology Services)
Market Cap:189.25B51.73B56.16B311.03B1.31B
Employees:N/A281,000317,50099,0008.85K
Qtrly Rev Growth (yoy):-0.060.02-0.030.140.15
Revenue:99.75B28.70B112.30B83.43B1.28B
Gross Margin:0.490.330.230.710.31
EBITDA:24.30B4.42B13.03B31.83B262.32M
Operating Margin:0.200.140.070.340.08
Net Income:16.48B3.33B5.11B22.82BN/A
EPS:14.944.702.622.700.67
P/E:12.0617.2911.2313.8819.00
PEG (5 yr expected):1.141.49-3.821.861.37
P/S:1.891.790.503.701.03

IBM has the second-highest P/S ratio among these four companies.

Here is a table of these competitors' insider-trading activities during the last 30 days.

CompanyInsider buying / sharesInsider selling / shares
ACN03,392
HPQ00
MSFT043,800

Only IBM has seen intensive insider selling during the last 30 days.

Conclusion

There have been four different insiders selling IBM, and there have not been any insiders buying IBM during the last 30 days. All four of these insiders decreased their holdings by more than 10%. IBM has an insider ownership of 0.10%.

Before going short IBM, I would like to get a bearish confirmation from the Point and Figure chart. The two main reasons for the proposed short entry are negative revenue growth, and the intensive insider-selling activity.

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