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Summary

  • Three insiders sold Time Warner Cable stock within one month.
  • The stock was not purchased by any insiders in the month of intensive selling.
  • All three of these insiders decreased their holdings by more than 10%.

Time Warner Cable (NYSE:TWC) offers video, high-speed data, and voice services in the United States.

(click to enlarge)

Insider selling during the last 30 days

Here is a table of Time Warner Cable's insider activity during the last 30 days.

NameTitleTrade DateShares SoldRule 10b5-1Current OwnershipDecrease In Ownership
Glenn BrittDirectorMar 17-Apr 790,000Yes177,542 shares + 207,800 options18.9%
Robert MarcusCEOMar 25-Apr 732,000Yes61,281 shares + 63,345 options20.4%
Marc Lawrence-ApfelbaumEVPMarch 2016,789Yes5,830 shares + 4,993 options60.8%

There have been 138,789 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 Time Warner Cable's insider activity by calendar month.

MonthInsider selling / sharesInsider buying / shares
April 201446,0000
March 2014122,7890
February 2014133,9830
January 2014270,0000
December 201330,0000
November 201334,2530
October 201300
September 201372,1530
August 201312,0000
July 201300
June 201331,5910
May 2013224,5940
April 201310,0160
March 201300
February 201364,3600
January 201300

There have been 1,051,739 shares sold, and there have been zero shares purchased by insiders since January 2013.

Financials

Time Warner Cable reported the full-year 2013 financial results on January 30 with the following highlights:

Revenue$22.1 billion
Net income$2.0 billion
Cash$525 million
Debt$25.1 billion

The three insiders sold their shares after these results.

Outlook

Time Warner Cable's 2014 guidance is as follows:

Revenue growth4%-5%
Adjusted OIBDA growth5%-6%
CapEx$3.7 billion

News

On February 13, Comcast Corporation (NASDAQ:CMCSA) and Time Warner Cable announced that their Boards of Directors had approved a definitive agreement for Time Warner Cable to merge with Comcast.

Competition

Time Warner Cable's competitors include AT&T (NYSE:T) and Verizon Communications (NYSE:VZ). Here is a table comparing these companies.

CompanyTWCTVZ
Market Cap:38.05B182.37B197.77B
Employees:51,200243,360176,800
Qtrly Rev Growth (yoy):0.020.020.03
Revenue:22.12B128.75B120.55B
Gross Margin:0.530.600.63
EBITDA:7.72B46.73B48.57B
Operating Margin:0.210.240.27
Net Income:1.94B18.25B11.50B
EPS:6.703.394.00
P/E:20.4710.33N/A
PEG (5 yr expected):1.232.202.37
P/S:1.701.431.66

Time Warner Cable has the highest P/S ratio among these three companies.

Here is a table of these competitors' insider activities this year.

CompanyInsider buying / sharesInsider selling / shares
T00
VZ016,517

Only Time Warner Cable has seen intensive insider selling during the last 30 days.

Conclusion

There have been three different insiders selling Time Warner Cable, and there have not been any insiders buying Time Warner Cable during the last 30 days. All three of these insiders decreased their holdings by more than 10%. Time Warner Cable has an insider ownership of 0.08%.

Before going short Time Warner Cable, I would like to get a bearish confirmation from the Point & Figure chart. The two main reasons for the proposed short entry are a relatively high P/S ratio, and the intensive insider-selling activity.

Source: Time Warner Cable: 3 Different Insiders Have Sold Shares During The Last 30 Days