MercadoLibre: Inside Selling Ignored by Permabulls

While the permabulls bluster and cheer on "their stock" from the sidelines (you can tell when people are fully bought in...that's when they shout the loudest) and rip into anyone that dare tell them anything bar 'you must buy BUY BUY...anyone who buys this stock is just so clever, like....dude', signs from people that really know about MercadoLibre (MELI) aren't so great.

President and CEO of MELI, Marcos Galperin, sold 96,895 shares on June 9th at $41.62, and another chunky 280,099 shares at $38.40 on June 10th. Here's the link to the SEC form explaining all. Y'know, maybe Marcos is reading this blog, checking out my plans for a MELI buy at low prices and thinking, "Hey, dat Otto gotta point....I can pick 'em up cheaper later.....".

Or maybe not.

Of course, a single disposal like this one isn't exactly the end of the world, especially when the Galperin dude still owns 5.39m shares of MELI. But it does start to smell a bit funny when you also notice that in the last month:

• Oscar Gimenez, the Senior VP payments, has sold 25,000 shares (leaving him with just 34,687 shares) at prices of $46.91, $52.53 and $50.38. Good timing, Oscar!

• Nicolas Szekasy, the Chief Financial Officer, has sold 40,000 shares at $52.16 and $46.94. Nice vote of confidence from the man who oversees the books, yeah? And the stock has dropped 26% since Nicolas started selling too. You don't suppose.......? Nah, couldn't be!

• Hernan Kazah, the Chief Operating Officer, has sold a total of 70,000 shares at prices of $51,85, $46.27 and $44.23. Nicely done, Hernan!

Anyway best of luck to you Marcos, and enjoy that cashout of fourteen million seven hundred and eighty-eight thousand five hundred and seventy-one dollars and fifty cents.

Hernan, you have fun with your wedge of three million three hundred and fifty-five thousand three hundred dollars.

Nicolas, buy yourself something shiny with your two million five thousand four hundred and ninety dollars, won't you?

Oscar, don't feel envious of the others, cos your one million two hundred and seventy-four thousand five hundred and fifty dollars is still a fair chunk of change, my man.

All before tax, of course. As they say in Argentina, "Que pais generoso."

Disclosure: No position in MELI.

Comments

[jimmydasaint]

Otto,

Great Article! Can someone give me the future outlook of this stock?

Thanks!

[SHADOW]

SELLING BY FOUNDERS NOT UNUSUAL SOME PORTFOLIO RE-BALANCING IS STANDARD THEY HAVE PLENTY LEFT PLUS E BAY HAS MASSIVE POSITION. BRAZIL IS A "JUST AWAKENING" SLEEPING GIANT

[User 207017]

Here is what I dont like about this stock on top of the many other things.

On top of the insider selling etc etc just take a moment and go to alexa.com. Alexa is like the free version of comscore.com and has all sorts of stats for websites from around the globe.

If you type in the brazil version of the site...mercadolivre.com you can see the site's stats. What you notice is a great q1 in terms of reach, ranking and page views. But what is very troubling is the fact that all of these things have been falling since the end of March. You can do the same thing for MELI's sites in any country but take a look at argentina ... mercadolibre.com.ar and mexico...mercadolibre.... Troubling enough is the fact that they are also declining in those 3 key metrics. Mexico is really falling off in a big way. So here is my problem...the company missed bottom line estimates in q1 with fantastic results in those 3 key metrics, so how in the world will they meet consensus for q2 with the situation being what it is in terms of reach, rank and page views all falling for q2. Its worth noting that consensus estimates are not falling, so something has to give. Personally, i think they will miss earnings again! if they could only muster 5 cents for q1 and based on the stats i have given above, can they really muster 9 cents this quarter? Mercadopago is a nice little piece of the puzzle but it wont really yield results until q3 or q4 as thats when it will be rolling out into brazil etc. To me, all of this selling does not bold well. Galperin has 12 months to sell 1.7 million shares and in just a couple of weeks he sells about 1/4 regardless of the fact that his heavy selling was driving down the price. Normal selling by insiders give the stock a chance to recover in price before continuing to sell. This guy just steamed ahead regardless of the consequences for the stock price. I dont like it - and I am glad i bought at $31.50.

[User 207017]

sorry the brazil version of MELI is actually mercadolivre.com.br - i mistyped it above

[User 207017]

and the mexico site is mercadolibre.com.mx - sorry for that omission as well - cheers

[LBC]

Alexa is GARBAGE. Should never be used in investment decisions.