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%.
Seagate Technology (STX) designs, manufactures, and sells electronic data storage products.
Insider selling during the last 30 days
Here is a table of Seagate'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|
|Michael Cannon||Director||Feb 7||25,228||No||12,837 shares||66.3%|
|Stephen Luczo||CEO||Feb 6||60,000||No||1,697,601 shares||3.4%|
|Jay Geldmacher||Director||Feb 4||4,000||No||9,798 shares||29.0%|
|Chong Sup Park||Director||Jan 30||2,270||No||38,518 shares||5.6%|
There have been 91,498 shares sold by insiders during the last 30 days.
Insider selling by calendar month
Here is a table of Seagate's insider-trading activity by calendar month.
|Month||Insider selling / shares||Insider buying / shares|
There have been 35,295,548 shares sold, and there have been 1,742 shares purchased by insiders since January 2013.
Seagate reported the fiscal 2014 second-quarter, which ended December 27, financial results on January 27 with the following highlights:
|Net income||$428 million|
Seagate's revenues peaked 12 months ago, but the stock price has advanced 47% during the last 12 months.
In the fiscal 2014 third quarter, Seagate expects to achieve at least $3.4 billion in revenues and to maintain non-GAAP margins approximately flat sequentially.
|Qtrly Rev Growth (yoy):||-0.07||0.28||-0.06|
|PEG (5 yr expected):||3.46||0.51||6.26|
Seagate has the lowest gross margin among these three companies.
Here is a table of these competitors' insider-trading activities during the last 30 days.
|Company||Insider buying / shares||Insider selling / shares|
SanDisk has also seen intensive insider selling during the last 30 days.
There have been four different insiders selling Seagate, and there have not been any insiders buying Seagate during the last 30 days. Two of these four insiders decreased their holdings by more than 10%. Seagate has an insider ownership of 4.10%.
Before going short Seagate, 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.