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dasdasdasdadas
Long/short equity, insider ownership
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Summary

  • Three insiders sold Comcast stock within one month.
  • The stock was not purchased by any insiders in the month of intensive selling.
  • Two of these three insiders decreased their holdings by more than 10%.

Comcast Corporation (NASDAQ:CMCSA) operates as a media and technology company worldwide.

(click to enlarge)

Insider selling during the last 30 days

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

NameTitleTrade DateShares SoldRule 10b5-1Current OwnershipDecrease In Ownership
David CohenEVPApril 130,474Yes531,574 shares + 156,425 options4.2%
Michael AngelakisCFOMarch 24-2883,710Yes217,176 shares27.8%
Arthur BlockSVPMarch 21-2849,671Yes28,836 shares + 19,800 options50.5%

There have been 163,855 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 Comcast's insider activity by calendar month.

MonthInsider selling / sharesInsider buying / shares
April 201430,4740
March 2014619,2830
February 201434,7690
January 201400
December 201300
November 201340,0320
October 201300
September 201316,2590
August 201319,9960
July 201300
June 2013144,0700
May 201383,9320
April 201312,5120
March 201314,5320
February 201335,5950
January 201300

There have been 1,051,454 shares sold, and there have been zero shares purchased by insiders since January 2013. The month of March 2014 has seen the most insider selling.

Financials

Comcast reported the full-year 2013 financial results on January 28 with the following highlights:

Revenue$64.7 billion
Net income$6.8 billion
Cash$5.3 billion
Debt$47.8 billion

The three insiders sold their shares after these results.

News

On February 13, Comcast and Time Warner Cable (NYSE:TWC) announced that their Boards of Directors had approved a definitive agreement for Time Warner Cable to merge with Comcast.


(click to enlarge)

(Source: Merger presentation)

Competition

Comcast's competitors include DirecTV (NASDAQ:DTV) and Dish Network Corporation (NASDAQ:DISH). Here is a table comparing these companies.

CompanyCMCSADTVDISH
Market Cap:127.98B38.54B27.26B
Employees:136,00028,20025,000
Qtrly Rev Growth (yoy):0.060.07-0.01
Revenue:64.66B31.75B13.90B
Gross Margin:0.700.480.37
EBITDA:21.43B7.81B2.88B
Operating Margin:0.210.170.13
Net Income:6.82B2.86B854.84M
EPS:2.565.171.76
P/E:19.1814.5733.85
PEG (5 yr expected):0.991.282.08
P/S:1.981.221.94

Comcast has the highest P/S ratio among these three companies.

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

CompanyInsider buying / sharesInsider selling / shares
DTV060,756
DISH099,000

Dish Network has also seen intensive insider selling during the last 30 days.

Conclusion

There have been three different insiders selling Comcast, and there have not been any insiders buying Comcast during the last 30 days. Two of these three insiders decreased their holdings by more than 10%. Comcast has an insider ownership of 0.09%.

Before going short Comcast, I would like to get a bearish confirmation from the Point & Figure chart. The two main reasons for the proposed short entry are a relatively high P/S ratio, and the intensive insider-selling activity.

Source: Comcast: 3 Different Insiders Have Sold Shares During The Last 30 Days