PPL Corporation (NYSE:PPL) generates, transmits, distributes, and sells electricity to wholesale and retail customers in the Pennsylvania, Kentucky, Virginia, Tennessee, and the United Kingdom.
Insider selling during the last 30 days
Here is a table of PPL Corporation's insider activity during the last 30 days.
|Name||Title||Trade Date||Shares Sold||Rule 10b5-1||Current Ownership||Decrease In Ownership|
|Victor Staffieri||President, PPL Subsidiary||April 14||73,360||Yes||0 shares + 146,720 options||33.3%|
|David DeCampli||President, PPL Subsidiary||Mar 28-Apr 14||41,286||Yes||47,188 shares + 41,627 options||31.7%|
|Gregory Dudkin||President, PPL Subsidiary||March 31||8,719||Yes||60 shares||99.3%|
|Vincent Sorgi||VP||March 31||1,500||Yes||7,677 shares||16.3%|
There have been 124,865 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 PPL Corporation's insider activity by calendar month.
|Month||Insider selling / shares||Insider buying / shares|
There have been 1,050,654 shares sold, and there have been zero shares purchased by insiders since January 2013.
PPL Corporation reported the full-year 2013 financial results on February 6 with the following highlights:
|Net income||$1.1 billion|
The four insiders sold their shares after these results.
(Source: Earnings presentation)
PPL Corporation's 2014 earnings forecast range is $2.05 to $2.25 per share.
(Source: Earnings presentation)
|Company||PPL||AEP||EXC||FE||Industry Average (Electric Utilities)|
|Qtrly Rev Growth (yoy):||-0.12||0.04||-0.02||0.05||0.06|
|PEG (5 yr expected):||23.09||3.72||-3.16||-9.48||2.33|
PPL Corporation 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 PPL Corporation has seen intensive insider selling during the last 30 days.
There have been four different insiders selling PPL Corporation, and there have not been any insiders buying PPL Corporation during the last 30 days. All four of these insiders decreased their holdings by more than 10%. PPL Corporation has an insider ownership of 0.08%.
Before going short PPL Corporation, 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, weak guidance, 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.