In a previous article, I mentioned about the 'My portfolio' feature at GuruFocus which lets you receive email alerts when insiders and Guru investors buy or sell stocks listed in a portfolio.
Today, I received one such email which is displayed below.
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Dear Adib Motiwala,
Company insiders have traded the stocks in your portfolios/watch list on GuruFocus.com. These are the details:
Insider Sells:
Usually I do not pay attention to insider sales because I believe there could be many reasons for insiders to sell a stock (tax purposes, wealth diversification, pay for large expenses). On the other hand, insider buying is a stronger indicator because the only reason to buy a stock is if they believe it were trading at an attractive valuation. However, when a lot of insiders are selling the stock and very regularly at that, then it is something to watch for.
It is interesting to see so many Insiders selling CRM stock on a single day. GuruFocus also lets you see a list of all insider buys and sells for a stock over the last 12 months. To see this list for CRM, check here. You will see that several insiders have been selling CRM stock for a long time now. ( Hint: Maybe GuruFocus should consider creating a Cluster Sell screen similar to the Cluster Buy screen).
Using the data from GuruFocus for the last 12 months, here is my analysis on sales by some insiders.
The CEO, Mr Marc Benioff owns over 11 million shares (about 8.5 % of shares outstanding) as of September 2010. He has been selling 10,000 shares a day since Dec 2009. Till date he has sold 2 million shares at an average price of $83.61 netting him $167 million.
Various directors have sold a total of 261,200 shares at an average price of $88 since 1/4/2010.
George Hu, EVP (Marketing) has sold 134,911 shares at an average price of $81 since 1/5/2010
Harris Parker, EVP (Technology) has been selling 467 shares almost daily since March 2, 2010. He has sold 154,262 shares at an average price of $90 since 2/26/2010.
The CFO, Mr Graham Smith has sold 61,069 shares at an average price of $97 since 2/26/2010.
Mr Van Veenendaal Frank, President (Global Corp) has sold 41,698 shares at an average price of $88 since 2/24/2010.
Total shares sold by all insiders: 3,027,237 at an average price of $84.
Other interesting things I noticed
Today, I received one such email which is displayed below.
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Dear Adib Motiwala,
Company insiders have traded the stocks in your portfolios/watch list on GuruFocus.com. These are the details:
Insider Sells:
- CRM: President, Global Corp. Sales sold 1,500 share on 2010-09-20 at $ 117.77 a share.
- CRM: Director sold 500 share on 2010-09-20 at $ 119.52 a share.
- CRM: Chairman of the Board & CEO, 10% Owner sold 20,000 share on 2010-09-20 at $ 119.31 a share.
- CRM: EVP, Technology sold 467 share on 2010-09-20 at $ 117.77 a share.
Usually I do not pay attention to insider sales because I believe there could be many reasons for insiders to sell a stock (tax purposes, wealth diversification, pay for large expenses). On the other hand, insider buying is a stronger indicator because the only reason to buy a stock is if they believe it were trading at an attractive valuation. However, when a lot of insiders are selling the stock and very regularly at that, then it is something to watch for.
It is interesting to see so many Insiders selling CRM stock on a single day. GuruFocus also lets you see a list of all insider buys and sells for a stock over the last 12 months. To see this list for CRM, check here. You will see that several insiders have been selling CRM stock for a long time now. ( Hint: Maybe GuruFocus should consider creating a Cluster Sell screen similar to the Cluster Buy screen).
Using the data from GuruFocus for the last 12 months, here is my analysis on sales by some insiders.
The CEO, Mr Marc Benioff owns over 11 million shares (about 8.5 % of shares outstanding) as of September 2010. He has been selling 10,000 shares a day since Dec 2009. Till date he has sold 2 million shares at an average price of $83.61 netting him $167 million.
Various directors have sold a total of 261,200 shares at an average price of $88 since 1/4/2010.
George Hu, EVP (Marketing) has sold 134,911 shares at an average price of $81 since 1/5/2010
Harris Parker, EVP (Technology) has been selling 467 shares almost daily since March 2, 2010. He has sold 154,262 shares at an average price of $90 since 2/26/2010.
The CFO, Mr Graham Smith has sold 61,069 shares at an average price of $97 since 2/26/2010.
Mr Van Veenendaal Frank, President (Global Corp) has sold 41,698 shares at an average price of $88 since 2/24/2010.
Total shares sold by all insiders: 3,027,237 at an average price of $84.
Other interesting things I noticed
- Every single insider transaction since Jan 2010 is a Sell.
- Shares outstanding has increased year over year due to dilution via stock options. Shares outstanding stood at 107 million in 2005. Currently, there are 134 million shares outstanding on a diluted basis.
- Several of these transactions must be due to exercising stock options. I looked at the ‘shares owned after trade’ in the export from GuruFocus and it contained the same share count even after several transactions for Graham Smith.
As the title of the article mentioned, the Price / Earnings ratio for CRM is over 200 using the last 12 months earnings. In the next article, I will look at some other valuation metrics and the last few quarterly results to see if sales growth, EPS growth and more importantly free cash flows justify this valuation.
Disclosure : I have a short position in CRM via options.
Disclosure : I have a short position in CRM via options.
- CEO Buys, CFO Buys: Stocks that are bought by their CEO/CFOs.
- Insider Cluster Buys: Stocks that multiple company officers and directors have bought.
- Double Buys: Companies that both Gurus and Insiders are buying
- Triple Buys: Companies that both Gurus and Insiders are buying, and Company is buying back.
