Varian Medical Systems (NYSE:VAR) designs, manufactures, sells, and services medical devices and software for treating cancer and other medical conditions with radiotherapy, radiosurgery, proton therapy, and brachytherapy worldwide.
Insider selling during the last 30 days
Here is a table of Varian's insider activity during the last 30 days.
|Name||Title||Trade Date||Shares Sold||Rule 10b5-1||Current Ownership||Decrease In Ownership|
|Kolleen Kennedy||SVP||Apr 9||775||Yes||6,236 shares + 14,738 options||3.6%|
|Elisha Finney||CFO||Apr 1||10,000||Yes||26,434 shares + 6,000 options||23.6%|
|Clarence Verhoef||SVP||Mar 17||1,140||Yes||768 shares||59.7%|
|John Kuo||SVP||Mar 11||9,913||Yes||15,317 shares + 16,480 options||23.8%|
There have been 21,828 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 Varian's insider activity by calendar month.
|Month||Insider selling / shares||Insider buying / shares|
There have been 1,090,933 shares sold, and there have been zero shares purchased by insiders since January 2013.
Varian reported the fiscal 2014 first-quarter, which ended December 27, financial results on January 22 with the following highlights:
|Net income||$98.0 million|
The four insiders sold their shares after these results.
Varian's guidance is as follows:
|Qtrly Rev Growth (yoy):||0.03||0.20||-0.02|
|PEG (5 yr expected):||1.39||-0.49||1.42|
Varian has the second-highest P/S ratio among these three companies.
Here is a table of these competitors' insider activities this year.
|Company||Insider buying / shares||Insider selling / shares|
Only Varian has seen intensive insider selling during the last 30 days.
There have been four different insiders selling Varian, and there have not been any insiders buying Varian during the last 30 days. Three of these four insiders decreased their holdings by more than 10%. Varian has an insider ownership of 0.31%.
Before going short Varian, I would like to get a bearish confirmation from the Point & Figure chart. The main reason for the proposed short entry is 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.