Seeking Alpha
Long/short equity, insider ownership
Profile| Send Message|
( followers)  

Summary

  • 4 insiders sold Demandware stock within one month.
  • The stock was not purchased by any insiders in the month of intensive selling.
  • 3 of these 4 insiders decreased their holdings by more than 10%.

Demandware (NYSE:DWRE) provides cloud-based digital commerce solutions in the United States, Germany, the United Kingdom, and internationally.
(click to enlarge)

Insider selling during the last 30 days

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

NameTitleTrade DateShares SoldOption Exercise & SaleRule 10b5-1Current OwnershipDecrease In Ownership
Charles KaneDirectorJune 1915,000YesYes14,391
shares + 12,280 options
36.0%
Lawrence BohnDirectorMay 29-June 12900,484NoNo913,232 shares49.6%
Scott DussaultEVPJune 217,249Yes & NoYes41,141
shares + 87,332 options
11.8%
Jitendra SaxenaDirectorJune 28,000NoYes61,289
shares + 65,472 options
5.9%

There have been 940,733 shares sold by insiders during the last 30 days. Charles Kane, Scott Dussault, and Jitendra Saxena sold their shares 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 Demandware's insider activity by calendar month.

MonthInsider selling / sharesInsider buying / shares
June 2014821,7990
May 2014188,9660
April 201433,0000
March 201421,5000
February 201450,0000
January 201400
December 201300
November 2013766,3600
October 201392,1990
September 201370,4580
August 2013105,4010
July 201330,2700
June 2013107,9480
May 2013860,9970
April 201355,3700
March 201323,7080
February 2013164,8720
January 201360,5640

There have been 3,453,412 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

Demandware reported the first-quarter financial results on May 6 with the following highlights:

Revenue$32.2 million
GAAP net loss$8.8 million
Cash$256.7 million
Debt$2.7 million

The four insiders sold their shares after these results.

Outlook

Demandware's guidance is as follows:

Q2/2014FY2014
Revenue$33.5-$34 million$147.5-$148.5 million
GAAP net loss$11.7-$12.2 million$29-$30 million

Competition

Demandware's competitors include eBay (NASDAQ:EBAY), Digital River (NASDAQ:DRIV), and Oracle (NYSE:ORCL). Here is a table comparing these companies.

CompanyDWREEBAYDRIVORCL
Market Cap:2.43B62.21B460.38M180.72B
Employees:38331,8001,317120,000
Qtrly Rev Growth (yoy):0.570.14-0.120.04
Revenue:115.40M16.56B376.46M37.90B
Gross Margin:0.740.680.660.82
EBITDA:-17.06M4.90B29.79M16.49B
Operating Margin:-0.190.21-0.020.39
Net Income:-21.67M-147.00M-13.56M11.12B
EPS:-0.68-0.11-0.602.39
P/E:N/AN/AN/A16.94
PEG (5 yr expected):-36.751.293.591.33
P/S:21.193.801.265.00

Demandware has the highest P/S ratio among these four companies.

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

CompanyInsider buying / sharesInsider selling / shares
EBAY0192,071
DRIV5850
ORCL06,703,750

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

Conclusion

There have been four different insiders selling Demandware, and there have not been any insiders buying Demandware during the last 30 days. Three of these four insiders decreased their holdings by more than 10%. Demandware has an insider ownership of 31.17%.

Before going short Demandware, 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 P/S ratio, negative earnings, and the intensive insider-selling activity.

Source: Demandware: 4 Different Insiders Have Sold Shares This Month