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

Apr.17.14 | About: PPL Corporation (PPL)

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.

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%
Click to enlarge

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
April 2014 94,173 0
March 2014 30,692 0
February 2014 111,450 0
January 2014 124,550 0
December 2013 0 0
November 2013 0 0
October 2013 3,568 0
September 2013 0 0
August 2013 3,097 0
July 2013 0 0
June 2013 0 0
May 2013 0 0
April 2013 535,445 0
March 2013 72,272 0
February 2013 0 0
January 2013 75,407 0
Click to enlarge

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
Click to enlarge

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.

Company PPL AEP EXC FE Industry Average (Electric Utilities)
Market Cap: 21.08B 25.61B 31.07B 14.30B 23.59B
Employees: 18,108 18,521 25,829 15,754 14.50K
Qtrly Rev Growth (yoy): -0.12 0.04 -0.02 0.05 0.06
Revenue: 11.86B 15.36B 24.89B 14.46B 15.60B
Gross Margin: 0.38 0.37 0.28 0.55 0.25
EBITDA: 4.42B 4.96B 7.40B 3.82B 4.79B
Operating Margin: 0.26 0.20 0.15 0.17 0.13
Net Income: 1.12B 1.48B 1.72B 375.00M N/A
EPS: 1.76 3.04 2.00 0.94 0.27
P/E: 18.98 17.27 18.12 38.37 24.74
PEG (5 yr expected): 23.09 3.72 -3.16 -9.48 2.33
P/S: 1.77 1.66 1.24 0.99 1.33
Click to enlarge

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
AEP 0 5,973
EXC 0 3,000
FE 0 31,119
Click to enlarge

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.

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.