SanDisk: 4 Different Insiders Have Sold Shares This Year

In this article, I will feature one tech stock that has seen intensive insider selling during the last 30 days. Intensive insider selling can be defined by the following three criteria:

1. The stock was sold by three or more insiders within one month.


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


3. At least two sellers decreased their holdings by more than 10%.

SanDisk Corporation (SNDK) designs, develops, manufactures, and markets flash storage card products that are used in various consumer electronics products.

(click to enlarge)

Insider selling during the last 30 days

Here is a table of SanDisk's insider-trading activity during the last 30 days by insider.

Name	Title	Trade Date	Shares Sold	Rule 10b5-1	Current Ownership	Decrease In Ownership
Steven Gomo	Director	Jan 30	10,000	No	7,377 shares	57.5%
Sumit Sadana	SVP	Jan 30	15,163	No	0 shares + 29,782 options	33.7%
Michael Marks	Director	Jan 28	10,000	No	27,184 shares	26.9%
Sanjay Mehrotra	CEO	Jan 10	75,000	Yes	40,675 shares + 157,875 options	27.4%

There have been 110,163 shares sold by insiders during the last 30 days. 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 SanDisk's insider-trading activity by calendar month.

Month	Insider selling / shares	Insider buying / shares
January 2014	110,163	0
December 2013	67,000	0
November 2013	123,514	0
October 2013	228,843	0
September 2013	79,000	0
August 2013	113,677	0
July 2013	38,000	0
June 2013	32,000	0
May 2013	170,231	0
April 2013	32,000	0
March 2013	197,000	0
February 2013	129,265	0
January 2013	60,000	0

There have been 1,380,693 shares sold, and there have been zero shares purchased by insiders since January 2013.

Financials

SanDisk reported the full-year 2013 financial results on January 22 with the following highlights:

Revenue	$6.2 billion
GAAP net income	$1.0 billion
Cash	$2.9 billion
Debt	$2.0 billion

Outlook

SanDisk's guidance is as follows:

	Q1/2014	FY2014
Revenue	$1.45-$1.525 billion	$6.4-$6.8 billion
Non-GAAP gross margin	47%-49%	45%-48%

Competition

SanDisk's competitors include Samsung (OTC:SSNLF), Hynix (OTC:HXSCL), and Micron (MU). Here is a table comparing these companies.

Company	SNDK	SSNLF	HXSCL	MU
Market Cap:	15.67B	166.88B	22.86B	24.44B
Employees:	4,636	N/A	N/A	30,900
Qtrly Rev Growth (yoy):	0.12	0.06	0.24	1.20
Revenue:	6.17B	205.82B	12.75B	11.28B
Gross Margin:	0.47	N/A	N/A	0.26
EBITDA:	2.11B	47.02B	N/A	3.11B
Operating Margin:	0.27	0.16	0.24	0.11
Net Income:	1.04B	27.42B	2.59B	1.82B
EPS:	4.34	209.52	18.20	1.66
P/E:	16.03	6.09	8.83	13.90
PEG (5 yr expected):	0.97	N/A	N/A	1.96
P/S:	2.56	0.81	1.88	2.21

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

Here is a table of these competitors' insider-trading activities during the last 12 months.

Company	Insider buying / shares	Insider selling / shares
SSNLF	N/A	N/A
HXSCL	N/A	N/A
MU	0	6,304,770

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

Conclusion

There have been four different insiders selling SanDisk, and there have not been any insiders buying SanDisk during the last 30 days. All four of these insiders decreased their holdings by more than 10%. SanDisk has an insider ownership of 0.24%.

Before going short SanDisk, I would like to get a bearish confirmation from the Point and Figure chart. The two main reasons for the proposed short entry are relatively high P/S ratio, and the intensive insider-selling activity.

Source: SanDisk: 4 Different Insiders Have Sold Shares This Year

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. (More...)

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