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%.
International Business Machines Corporation (IBM) provides information technology products and services worldwide.
Insider selling during the last 30 days
Here is a table of IBM's insider-trading activity during the last 30 days.
|Name||Title||Trade Date||Shares Sold||Rule 10b5-1||Current Ownership||Decrease In Ownership|
|Michael Rhodin||SVP||Feb 11||4,500||No||22,594 shares||16.6%|
|Rodney Adkins||SVP||Feb 10||11,731||No||0 shares||100%|
|James Kavanaugh||VP||Feb 10||5,650||No||15,351 shares||26.9%|
|Joan Spero||Director||Feb 6||4,000||No|
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.
|Month||Insider selling / shares||Insider buying / shares|
There have been 356,765 shares sold, and there have been 1,000 shares purchased by insiders since January 2013.
IBM reported the full-year 2013 financial results on January 21 with the following highlights:
|Net income||$16.5 billion|
IBM's revenues peaked in early 2012.
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.
(Source: Earnings presentation)
|Company||IBM||ACN||HPQ||MSFT||Industry Average (Information Technology Services)|
|Qtrly Rev Growth (yoy):||-0.06||0.02||-0.03||0.14||0.15|
|PEG (5 yr expected):||1.14||1.49||-3.82||1.86||1.37|
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.
|Company||Insider buying / shares||Insider selling / shares|
Only IBM has seen intensive insider selling during the last 30 days.
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.