IBM: 4 Different Insiders Have Sold Shares This Year

Feb.13.14 | About: International Business (IBM)

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.

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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

1,000 shares

80.0%
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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
February 2014 25,881 0
January 2014 0 0
December 2013 0 0
November 2013 99,331 0
October 2013 0 0
September 2013 0 0
August 2013 0 1,000
July 2013 0 0
June 2013 0 0
May 2013 20,885 0
April 2013 0 0
March 2013 0 0
February 2013 133,181 0
January 2013 77,487 0
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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
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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.

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(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.

Company IBM ACN HPQ MSFT Industry Average (Information Technology Services)
Market Cap: 189.25B 51.73B 56.16B 311.03B 1.31B
Employees: N/A 281,000 317,500 99,000 8.85K
Qtrly Rev Growth (yoy): -0.06 0.02 -0.03 0.14 0.15
Revenue: 99.75B 28.70B 112.30B 83.43B 1.28B
Gross Margin: 0.49 0.33 0.23 0.71 0.31
EBITDA: 24.30B 4.42B 13.03B 31.83B 262.32M
Operating Margin: 0.20 0.14 0.07 0.34 0.08
Net Income: 16.48B 3.33B 5.11B 22.82B N/A
EPS: 14.94 4.70 2.62 2.70 0.67
P/E: 12.06 17.29 11.23 13.88 19.00
PEG (5 yr expected): 1.14 1.49 -3.82 1.86 1.37
P/S: 1.89 1.79 0.50 3.70 1.03
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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
ACN 0 3,392
HPQ 0 0
MSFT 0 43,800
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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.

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.