Aecom Technology: 6 Different Insiders Have Sold Shares During The Last 30 Days

Apr.19.14 | About: AECOM Technology (ACM)

Summary

Six insiders sold Aecom Technology stock within one month.

The stock was not purchased by any insiders in the month of intensive selling.

Two of these six insiders decreased their holdings by more than 10%.

Aecom Technology (NYSE:ACM) is a provider of professional technical and management support services for public and private clients around the world.

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Insider selling during the last 30 days

Here is a table of Aecom Technology's insider activity during the last 30 days.

Name Title Trade Date Shares Sold Rule 10b5-1 Current Ownership Decrease In Ownership
Ronald Osborne SVP April 15 8,000 Yes 26,313 shares 23.3%
Frederick Werner President, EMEA April 4 16,286 Yes 192,429 shares + 49,636 options 6.3%
John Dionisio Executive Chairman April 1 20,000 Yes 694,141 shares + 247,713 options 2.1%
Richard Newman Director April 1-2 44,690 Yes 500,474 shares + 93,104 options 7.0%
Jane Chmielinski COO March 24-25 90,850 Yes 124,737 shares 42.1%
William Ouchi Director March 18 4,885 Yes 66,649 shares + 20,116 options 5.3%
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There have been 184,711 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 Aecom Technology's insider activity by calendar month.

Month Insider selling / shares Insider buying / shares
April 2014 88,976 0
March 2014 170,735 0
February 2014 50,800 0
January 2014 56,986 0
December 2013 10,000 0
November 2013 40,000 0
October 2013 47,285 0
September 2013 56,200 0
August 2013 125,000 0
July 2013 262,000 0
June 2013 128,200 0
May 2013 140,000 0
April 2013 40,000 0
March 2013 265,000 0
February 2013 77,381 0
January 2013 92,103 0
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There have been 1,650,666 shares sold, and there have been zero shares purchased by insiders since January 2013.

Financials

Aecom Technology reported the fiscal 2014 first-quarter, which ended December 31, financial results on February 4 with the following highlights:

Revenue $2.0 billion
Net income $56.4 million
Cash $681.7 million
Debt $1.2 billion
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The six insiders sold their shares after these results.

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(Source: Earnings presentation)

Outlook

Aecom Technology's fiscal 2014 EPS guidance is $2.50 to $2.60.

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(Source: Earnings presentation)

Competition

Aecom Technology's competitors include Jacobs Engineering (NYSE:JEC), Fluor Corporation (NYSE:FLR), and Foster Wheeler AG (FWLT). Here is a table comparing these companies.

Company ACM JEC FLR FWLT
Market Cap: 3.22B 8.41B 12.49B 3.33B
Employees: 44,400 49,400 38,129 13,311
Qtrly Rev Growth (yoy): -0.03 0.11 -0.10 0.17
Revenue: 8.09B 12.13B 27.35B 3.31B
Gross Margin: 0.06 0.15 0.05 0.17
EBITDA: 453.51M 763.91M 1.40B 243.70M
Operating Margin: 0.05 0.05 0.04 0.06
Net Income: 257.53M 417.82M 667.71M 96.90M
EPS: 2.58 3.18 4.06 0.96
P/E: 12.58 20.05 19.18 14.52
PEG (5 yr expected): 1.76 1.21 1.26 1.03
P/S: 0.40 0.69 0.45 1.00
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Aecom Technology has the highest PEG ratio among these four companies.

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

Company Insider buying / shares Insider selling / shares
JEC 10,000 72,094
FLR 0 35,530
FWLT 0 295,012
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Only Aecom Technology has seen intensive insider selling during the last 30 days.

Conclusion

There have been six different insiders selling Aecom Technology, and there have not been any insiders buying Aecom Technology during the last 30 days. Two of these six insiders decreased their holdings by more than 10%. Aecom Technology has an insider ownership of 12.73%.

Before going short Aecom Technology, 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 PEG ratio, negative revenue growth, 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.