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Summary

  • 6 insiders sold Western Digital stock within one month.
  • The stock was not purchased by any insiders in the month of intensive selling.
  • 4 of these 6 insiders decreased their holdings by more than 10%.

Western Digital Corporation (NASDAQ:WDC) develops, manufactures, and sells storage products and solutions that enable people to create, manage, experience, and preserve digital content.

(click to enlarge)

Insider selling during the last 30 days

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

NameTitleTrade DateShares SoldOption Exercise & SaleRule 10b5-1Current OwnershipDecrease In Ownership
Stephen MilliganCEOJune 1913,877YesYes99,525
shares + 109,459 options
6.2%
Thomas PardunDirectorJune 176,909YesNo27,867
shares + 28,894 options
10.9%
William KimseyDirectorJune 178,277YesNo20,392
shares + 5,391 options
24.3%
Michael RaySVPJune 17-189,060YesYes29,316 shares + 37,738 options11.9%
James MurphyPresident, WD SubsidiaryMay 27-June 1014,668Yes & NoNo57,578
shares + 56,649 options
11.4%
Michael CordanoPresident, HGST SubsidiaryJune 65,896YesYes79,132
shares + 53,063 options
4.3%

There have been 58,687 shares sold by insiders during the last 30 days. Stephen Milligan, Michael Ray, and Michael Cordano 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 Western Digital's insider activity by calendar month.

MonthInsider selling / sharesInsider buying / shares
June 201451,0320
May 201420,5010
April 20146,0160
March 201449,3930
February 201461,6070
January 20146,0160
December 201354,1550
November 201312,648,3170
October 201324,2130
September 201375,9940
August 201313,2370
July 20137,7130
June 201342,8090
May 2013196,6220
April 20133,7500
March 201361,8910
February 201369,8630
January 201342,0550

There have been 13,435,184 shares sold and there have been zero shares purchased by insiders since January 2013.

Financials

Western Digital reported the fiscal 2014 third-quarter, which ended March 28, financial results on April 30 with the following highlights:

Revenue$3.7 billion
Net income$375 million
Cash$4.9 billion
Debt$2.5 billion

The six insiders sold their shares after these results.

Western Digital has negative revenue growth currently.

Outlook

Western Digital's fiscal 2014 fourth-quarter guidance is as follows:

Revenue$3.5-$3.6 billion
Non-GAAP EPS$1.65-$1.75

Competition

Western Digital's competitors include Seagate Technology (NASDAQ:STX). Here is a table comparing these two companies.

CompanyWDCSTX
Market Cap:21.50B18.38B
Employees:85,77753,200
Qtrly Rev Growth (yoy):-0.02-0.03
Revenue:15.21B13.85B
Gross Margin:0.290.28
EBITDA:3.18B2.73B
Operating Margin:0.130.13
Net Income:1.04B1.60B
EPS:4.284.49
P/E:21.3712.54
PEG (5 yr expected):7.091.28
P/S:1.411.33

Western Digital is trading at a higher P/E ratio than Seagate. In Seagate, there have been 316,458 shares sold and there have been zero shares purchased by insiders this year. Only Western Digital has seen intensive insider selling during the last 30 days.

Conclusion

There have been six different insiders selling Western Digital and there have not been any insiders buying Western Digital during the last 30 days. Four of these six insiders decreased their holdings by more than 10%. Western Digital has an insider ownership of 10.98%.

Before going short Western Digital, 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/E ratio, 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.

Source: Western Digital: 6 Different Insiders Have Sold Shares This Month