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Summary

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

Silicon Laboratories (NASDAQ:SLAB) designs and develops analog-intensive, mixed-signal integrated circuits.

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Insider selling during the last 30 days

Here is a table of Silicon Laboratories' insider activity during the last 30 days.

NameTitleTrade DateShares SoldRule 10b5-1Current OwnershipDecrease In Ownership
Robert EnloeDirectorApril 163,546Yes2,992 shares54.2%
Jonathan IvesterSVPApril 84,000Yes89,787 shares + 11,497 options3.8%
John HollisterCFOApril 11,000Yes36,804 shares2.6%
Laurence WalkerDirectorMarch 3112,086Yes7,171 shares + 6,667 options46.6%

There have been 20,632 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 Silicon Laboratories' insider activity by calendar month.

MonthInsider selling / sharesInsider buying / shares
April 20148,5460
March 201458,3740
February 2014209,7430
January 201460,0410
December 20137,5000
November 20131,5000
October 201335,4590
September 201373,5000
August 201321,5125,000
July 20132,5750
June 20131,5750
May 20131,5750
April 201312,9220
March 20137,2750
February 201317,9030
January 201370,4530

There have been 590,453 shares sold, and there have been 5,000 shares purchased by insiders since January 2013. The month of February 2014 has seen the most insider selling.

Financials

Silicon Laboratories reported the fiscal 2013 full-year, which ended December 28, financial results on January 29 with the following highlights:

Revenue$580.1 million
Net income$49.8 million
Cash$275.4 million
Debt$95.0 million

The four insiders sold their shares after these results.

Outlook

Silicon Laboratories' first-quarter guidance is as follows:

Revenue$142-$146 million
Non-GAAP EPS$0.40-$0.44
GAAP EPS$0.14-$0.18

Competition

Silicon Laboratories' competitors include Analog Devices (NASDAQ:ADI), and Texas Instruments (NASDAQ:TXN). Here is a table comparing these companies.

CompanySLABADITXN
Market Cap:2.18B16.61B49.98B
Employees:1,0609,10032,209
Qtrly Rev Growth (yoy):-0.040.010.02
Revenue:580.09M2.64B12.20B
Gross Margin:0.610.650.52
EBITDA:96.11M908.12M4.19B
Operating Margin:0.120.300.24
Net Income:49.82M694.85M2.12B
EPS:1.142.201.91
P/E:44.7524.0223.99
PEG (5 yr expected):1.211.982.03
P/S:3.746.264.07

Silicon Laboratories has the highest P/E ratio among these three companies.

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

CompanyInsider buying / sharesInsider selling / shares
ADI0471,071
TXN01,093,812

Only Silicon Laboratories has seen intensive insider selling during the last 30 days.

Conclusion

There have been four different insiders selling Silicon Laboratories, and there have not been any insiders buying Silicon Laboratories during the last 30 days. Two of these four insiders decreased their holdings by more than 10%. Silicon Laboratories has an insider ownership of 7.32%.

Silicon Laboratories has a $44 price target from the Point & Figure chart. I believe there is an opportunity for a short entry with the $44 price target. I would place a stop loss at $54, which is the eight-year high. The three main reasons for the proposed short entry are a bearish Point & Figure chart, relatively high P/E ratio, and the intensive insider-selling activity.

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Disclosure: I have no positions in any stocks mentioned, but may initiate a short position in SLAB over 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.

Source: Silicon Laboratories: 4 Different Insiders Have Sold Shares During The Last 30 Days