Broadcom: 7 Different Insiders Have Sold Shares This Month

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 |  About: Broadcom Corporation (BRCM), Includes: INTC, QCOM
by: Markus Aarnio

Summary

7 insiders sold Broadcom stock within one month.

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

2 of these 7 insiders decreased their holdings by more than 10%.

Broadcom Corporation (NASDAQ:BRCM) provides semiconductor solutions for wired and wireless communications.

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Insider selling during the last 30 days

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

Name Title Trade Date Shares Sold Option Exercise & Sale Rule 10b5-1 Current Ownership Decrease In Ownership
Rajiv Ramaswami EVP June 6 57,058 Yes & No Yes 364,414
shares + 91,666 options
11.1%
Daniel Marotta EVP June 6 32,576 Yes & No Yes 403,160 shares + 170,833 options 5.4%
Scott McGregor CEO June 2-9 200,000 Yes Yes 1,761,547
shares + 2,342,123 options
4.6%
Henry Samueli Chairman June 2 50,000 No Yes 24,059,635 shares 0.2%
Terri Timberman EVP June 2-3 85,000 Yes Yes 254,060
shares
25.1%
Robert Rango EVP June 2 28,122 Yes Yes 416,774 shares + 370,845 options 3.4%
John Major Director June 2 1,000 No Yes 43,925
shares + 31,250 options
1.3%
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There have been 453,756 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 Broadcom's insider activity by calendar month.

Month Insider selling / shares Insider buying / shares
June 2014 453,756 0
May 2014 16,561 0
April 2014 34,179 0
March 2014 33,435 0
February 2014 36,148 0
January 2014 24,073 0
December 2013 0 0
November 2013 20,955 0
October 2013 2,500 0
September 2013 0 0
August 2013 16,696 0
July 2013 162,605 0
June 2013 199,750 0
May 2013 218,994 0
April 2013 513,943 0
March 2013 214,900

0

February 2013 197,863 0
January 2013 250,634 0
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There have been 2,396,992 shares sold and there have been zero shares purchased by insiders since January 2013. The month of June has seen the most insider selling this year.

Financials

Broadcom reported the first-quarter financial results on April 24 with the following highlights:

Revenue $2.0 billion
Net income $165 million
Cash $2.9 billion
Debt $1.4 billion
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The seven insiders sold their shares after this report.

Broadcom has negative revenue growth currently.

News

On June 2, Broadcom announced that it is exploring strategic alternatives for its cellular baseband business, including a potential sale or wind-down. Broadcom's stock surged $6 after this news and the seven insiders sold their shares after the surge.

Outlook

Broadcom's second-quarter guidance is as follows:

Revenue $2.0-$2.1 billion
GAAP product gross margin up ~200 basis points
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Click to enlarge

(Source: Earnings presentation)

On June 2, Broadcom updated its outlook and now expects both GAAP and non-GAAP product gross margin to be at or above the high end of the range shown in the slide.

Competition

Broadcom's competitors include Intel (NASDAQ:INTC), and Qualcomm (NASDAQ:QCOM). Here is a table comparing these companies.

Company BRCM INTC QCOM
Market Cap: 22.19B 140.58B 133.65B
Employees: 12,550 107,600 31,000
Qtrly Rev Growth (yoy): -0.01 0.02 0.04
Revenue: 8.24B 52.89B 25.71B
Gross Margin: 0.50 0.61 0.59
EBITDA: 1.29B 20.63B 8.64B
Operating Margin: 0.11 0.24 0.29
Net Income: 398.00M 9.50B 6.49B
EPS: 0.68 1.87 3.99
P/E: 55.71 15.11 19.87
PEG (5 yr expected): 1.67 1.99 1.02
P/S: 2.71 2.63 5.25
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Broadcom has the weakest revenue growth among these three companies.

Here is a table of these competitors' insider activities during the last 30 days.

Company Insider buying / shares Insider selling / shares
INTC 0 134,291
QCOM

0

210,481
Click to enlarge

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

Conclusion

There have been seven different insiders selling Broadcom, and there have not been any insiders buying Broadcom during the last 30 days. Two of these seven insiders decreased their holdings by more than 10%. Broadcom has an insider ownership of 0.28%.

Before going short Broadcom, I would like to get a bearish confirmation from the Point & Figure chart. The two main reasons for the proposed short entry are negative revenue growth, and the intensive insider selling activity.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.