Cavium: 3 Different Insiders Have Sold Shares This Month

May.12.14 | About: Cavium Networks, (CAVM)


3 insiders sold Cavium stock within one month.

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

All 3 of these insiders decreased their holdings by more than 10%.

Cavium (NASDAQ:CAVM) designs, develops, and markets semiconductor processors for intelligent and secure networks.

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Insider selling during the last 30 days

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

Name Title Trade Date Shares Sold Rule 10b5-1 Current Ownership Decrease In Ownership
Syed Ali CEO May 9 150,000 Yes 1,170,412
Vincent Pangrazio SVP May 5 3,325 Yes 11,036 shares 23.2%
Anil Jain VP May 2 36,475 Yes 27,875 shares + 66,400 options 27.9%
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There have been 189,800 shares sold by insiders during the last 30 days. All these shares were sold pursuant to a Rule 10b5-1 plan. More details about the Rule 10b5-1 trading plan can be found from this link.

Insider selling by calendar month

Here is a table of Cavium's insider activity by calendar month.

Month Insider selling / shares Insider buying / shares
May 2014 189,800 0
April 2014 0 0
March 2014 0 0
February 2014 225,325 0
January 2014 0 0
December 2013 0 0
November 2013 3,500 0
October 2013 0 0
September 2013 0 0
August 2013 33,000 0
July 2013 0 0
June 2013 0 0
May 2013 2,750 0
April 2013 0 0
March 2013 20,000 0
February 2013 12,625 0
January 2013 0 0
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There have been 487,000 shares sold, and there have been zero shares purchased by insiders since January 2013.


Cavium reported the first-quarter financial results on April 30 with the following highlights:

Revenue $83.2 million
Net income $2.3 million
Cash $124.1 million
Debt $45.3 million
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The three insiders sold their shares after these results.


Cavium's second-quarter guidance is as follows:

Revenue $89-$91 million
Non-GAAP EPS $0.32-$0.34
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Cavium's competitors include Broadcom (BRCM) and Intel (NASDAQ:INTC). Here is a table comparing these companies.

Market Cap: 2.19B 17.40B 130.92B
Employees: 830 12,550 107,600
Qtrly Rev Growth (yoy): 0.20 0.01 0.02
Revenue: 317.70M 8.24B 52.89B
Gross Margin: 0.63 0.50 0.61
EBITDA: 36.04M 1.29B 20.63B
Operating Margin: 0.01 0.11 0.24
Net Income: 2.57M 398.00M 9.50B
EPS: 0.04 0.68 1.87
P/E: 1,011.71 43.67 14.07
PEG (5 yr expected): 0.93 1.38 1.86
P/S: 6.89 2.12 2.48
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Cavium has the highest P/S ratio among these three companies.

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

Company Insider buying / shares Insider selling / shares
BRCM 0 144,396
INTC 0 954,352
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Only Cavium has seen intensive insider selling during the last 30 days.


There have been three different insiders selling Cavium, and there have not been any insiders buying Cavium during the last 30 days. All three of these insiders decreased their holdings by more than 10%. Cavium has an insider ownership of 3.10%.

Before going short Cavium, 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.

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.