Oracle Corporation (NYSE:ORCL) develops, manufactures, markets, hosts, and supports database and middleware software, applications software and hardware systems.
Insider selling during the last 30 days
Here is a table of Oracle's insider activity during the last 30 days by insider.
|Name||Title||Trade Date||Shares Sold||Rule 10b5-1||Option Exercise||Profit||Current Ownership||Decrease In Ownership|
|Mark Hurd||President||April 1||500,000||Yes||Yes||$8,720,150||1,000 shares + 5,900,000 options||7.8%|
|Corey West||SVP||March 31||50,000||Yes||Yes||$1,015,000||5,000 shares||90.9%|
|Dorian Daley||SVP||March 25||100,000||Yes||Yes||$1,722,570||5,000 shares + 200,000 options||32.8%|
|Jeffrey Henley||Chairman||March 21||750,000||Yes||Yes||$21,019,725||1,934,516 shares||27.9%|
|Hector Garcia-Molina||Director||March 17||2,500||Yes||Yes||$64,287||5,000 shares + 20,000 options||9.1%|
There have been 1,402,500 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 Oracle's insider activity by calendar month.
|Month||Insider selling / shares||Insider buying / shares|
There have been 11,628,783 shares sold, and there have been zero shares purchased by insiders since January 2013.
Oracle reported the fiscal 2014 third-quarter, which ended February 28, financial results on March 18 with the following highlights:
|GAAP net income||$2.6 billion|
Four of these five insiders sold their shares after these results.
Oracle's fiscal 2014 fourth-quarter guidance is as follows:
|Qtrly Rev Growth (yoy):||0.04||0.14||-0.06||0.02|
|PEG (5 yr expected):||1.36||2.01||1.20||1.77|
Oracle has the highest P/S ratio among these four companies.
Here is a table of these competitors' insider activities this year.
|Company||Insider buying / shares||Insider selling / shares|
Only Oracle 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%.
There have been five different insiders selling Oracle, and there have not been any insiders buying Oracle during the last 30 days. Three of these five insiders decreased their holdings by more than 10%. The five insiders made a combined profit of $32,541,732. Oracle has an insider ownership of 23.68%.
There are 20 analyst buy ratings, 19 neutral ratings, and two sell ratings with an average price target of $40.78. Before going short Oracle, I would like to get a bearish confirmation from the Point & Figure chart. The three main reasons for the proposed short entry are a relatively high P/S ratio, bearish analyst price targets, 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.