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Summary

  • Four insiders sold PPL Corporation stock within one month.
  • The stock was not purchased by any insiders in the month of intensive selling.
  • All four of these insiders decreased their holdings by more than 10%.

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.

(click to enlarge)

Insider selling during the last 30 days

Here is a table of PPL Corporation's insider activity during the last 30 days.

NameTitleTrade DateShares SoldRule 10b5-1Current OwnershipDecrease In Ownership
Victor StaffieriPresident, PPL SubsidiaryApril 1473,360Yes0 shares + 146,720 options33.3%
David DeCampliPresident, PPL SubsidiaryMar 28-Apr 1441,286Yes47,188 shares + 41,627 options31.7%
Gregory DudkinPresident, PPL SubsidiaryMarch 318,719Yes60 shares99.3%
Vincent SorgiVPMarch 311,500Yes7,677 shares16.3%

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.

MonthInsider selling / sharesInsider buying / shares
April 201494,1730
March 201430,6920
February 2014111,4500
January 2014124,5500
December 201300
November 201300
October 20133,5680
September 201300
August 20133,0970
July 201300
June 201300
May 201300
April 2013535,4450
March 201372,2720
February 201300
January 201375,4070

There have been 1,050,654 shares sold, and there have been zero shares purchased by insiders since January 2013.

Financials

PPL Corporation reported the full-year 2013 financial results on February 6 with the following highlights:

Revenue$11.9 billion
Net income$1.1 billion
Cash$1.1 billion
Debt$21.6 billion

The four insiders sold their shares after these results.

(click to enlarge)

(Source: Earnings presentation)

Outlook

PPL Corporation's 2014 earnings forecast range is $2.05 to $2.25 per share.

(click to enlarge)

(Source: Earnings presentation)

Competition

PPL Corporation's competitors include American Electric Power (NYSE:AEP), Exelon Corporation (NYSE:EXC), and FirstEnergy (NYSE:FE). Here is a table comparing these companies.

CompanyPPLAEPEXCFEIndustry Average (Electric Utilities)
Market Cap:21.08B25.61B31.07B14.30B23.59B
Employees:18,10818,52125,82915,75414.50K
Qtrly Rev Growth (yoy):-0.120.04-0.020.050.06
Revenue:11.86B15.36B24.89B14.46B15.60B
Gross Margin:0.380.370.280.550.25
EBITDA:4.42B4.96B7.40B3.82B4.79B
Operating Margin:0.260.200.150.170.13
Net Income:1.12B1.48B1.72B375.00MN/A
EPS:1.763.042.000.940.27
P/E:18.9817.2718.1238.3724.74
PEG (5 yr expected):23.093.72-3.16-9.482.33
P/S:1.771.661.240.991.33

PPL Corporation has the highest P/S ratio among these four companies.

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

CompanyInsider buying / sharesInsider selling / shares
AEP05,973
EXC03,000
FE031,119

Only PPL Corporation has seen intensive insider selling during the last 30 days.

Conclusion

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.

Source: PPL Corporation: 4 Different Insiders Have Sold Shares During The Last 30 Days