GTAT’s Recent Insider Selling: Don’t lose any sleep over it!

Posted: May 3, 2014 by mattmargolis24 in GTAT Investor Information
Tags: , , ,

I have seen some recent chatter regarding  a recent Form 4 filing on behalf of GT’s CEO Tom Gutierrez.  Gutierrez sold more than 100,000 shares under rule 10b5-1.  The predetermined sale date was adopted on March 14, 2014.  This is by no means any indication of a timed “insider” sale, which is why the rule was was adopted in the first place.

10b5-1 A rule established by the Securities Exchange Commission (SEC) that allows insiders of publicly traded corporations to set up a trading plan for selling stocks they own. Rule 10b5-1 allows major holders to sell a predetermined number of shares at a predetermined time. 10b5-1 plans are used by many corporate executives in an attempt to avoid accusations of insider trading.

Form 4

form4 a

The recent wave of insider selling is sometimes an indication of a top in the business.  Or it might timing of options that were granted that remained underwater or just were not profitable enough to be sold.   Fidelity research has a nice tool that allows you to view insider selling over at two-year period.

Important Note: the most recent sale in May is not reflected in the information provided below.

 

GTAT CEO Buys

ceo buys

GTAT CEO Automatic Sells

automatic sells

GTAT CEO Dispositions Non Open Market

ceo disposition non open market

GTAT All Insider buys

Acquisitions

GTAT All Insider Dispositions Non Open Market

all disposition non open market

GTAT All Insider Automatic Sale

automatic sells

Micron Insider Automatic Sales

Micron sells

Conclusion

I’m big into relationship between data points as well as Newton’s third law of  motion, “For every action, there is an equal and opposite reaction”.  I’m sure you are wondering why I would bring up Newton.  I believe there is a direct relationship between insider selling and stock price movement.  For comparison purposes I pulled up Micron’s Insider Automatic sales over the last 2 years because the stock price chart is very similar to GT’s.  Insider selling picked up in the middle of 2013 after Micron’s share price tripled from where they traded in 2012 after being dormant for the previous 2 years.  GT’s shares haven’t traded above $10 since 2011, and insiders have been holding shares close to their vest while they waiting for the company to turn around and it comes as no surprise to me that GT’s insider selling picked up in 2014.

My key takeaway, the selling is a direct result of the lack of selling over the past two years and share price appreciation that has finally occurred after being suppressed under $10 a share for nearly 2.5 years.   My bottom line is, Don’t lose any sleep over it!

 

I am long GTAT and will not be selling any of my shares despite the fact shares of GTAT are up 73% over the last 3 months, up 94% YTD and up 340% over the last 12 months.

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Comments
  1. shane says:

    As always, appreciate the information, Matt. BTW, you realize Samsung is now advertising on your site? As long as the proceeds go toward GTAT, lol

    Liked by 1 person

  2. I can’t tell you how much I appreciate your articles. You’re like a stock detective! 🙂 Thanks for your insight.

    Like

  3. Thanks Matt! Another helpful and TIMELY post.

    Like

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