Are Semiconductor
insiders telling
us something?
After falling sharply in March and ticking slightly upward in April, stock sales by corporate insiders and Form 144 registrations of restricted securities ramped considerably in May. Nonetheless, dollar values for both totals continue to trend downward from historical highs established in February/March 2000. Sales by insiders in the technology sector have followed a similar tack.
But insiders at semiconductor stocks have marched to a different drummer altogether.
From a period high in January 2000, the dollar value of insider sales at semiconductor stocks actually trended downward through the spring of 2000, before ramping mightily into mid-year. Not incidentally, the semiconductors were among the last technology stocks to break in September.
Most importantly, insiders in the semiconductors have been increasingly less tight-fisted in recent months than have those elsewhere in technology and indeed, in the market as a whole. Where insider sales elsewhere in the market have continued to trend downward, those by semiconductor insiders bottomed last November and have maintained a marked upward bias since.
In April, Richard Hill, chairman and CEO of Novellus Systems Inc. suggested that it "would probably take one to two quarters before you would see earnings start to head in the northerly direction." Having already sold in March, insiders surfaced shortly thereafter to lock in a sudden 40% gain.
At about the same time, insider selling heated up National Semiconductor Corp. Among the sellers, former CFO, newly appointed COO Don Macleod made his first sale since 1993--a clear reversal from an August 2000 acquisition. On May 8, National Semiconductor guided analysts' estimates from 4 cents to a pro forma net loss of 4 cents a share to break-even
Insiders have also sold at PMC-Sierra Inc., and Advanced Micro Devices Inc., where from April 23 through May 17, fifteen insiders sold or filed their intentions to sell 869,892 shares between $27 and $33 per share. The timing of insider sales at AMD has not always been immaculate, but these particular sellers have been on the money before, most notably ahead of a 40% swoon in early '97 and a 55% plunge in August last year.
At equipment maker KLA-Tencor Corp., executives recently sold for the first time since September 2000. In April and May, nine insiders sold or filed their intentions to sell 562,904 shares at $48.50 to $56.65 per share. Oddly, these once-frequent sellers had sold on average just 44,000 shares in each of the prior four quarters, while many of the recent sellers, including the company's chairman, general counsel, and the COO reduced their exposure to the issue by between 25% and 50%.
Clearly, the semis have benefited from the sharp market rally off the April 4 bottom. As such, some degree of profit taking is to be expected. The question, obviously, is how much? The individual cases are compelling; but more than anything, this is a sector story.
This much seems certain: at the semiconductors, more so than elsewhere in tech, insiders have been quick to lock in last month's surprise windfall. --Paul Elliott, Thomson Financial/First Call in Rockville, Md.
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ACTEL CORP>
Anthony Farinaro, vice president, sold 1,245 shares of common at $22.50 each on May 7 and now directly holds 344.
ALLIANCE SEMICONDUCTOR CORP.
David Eickler, vice president, sold 40,000 shares of common at $13.84 each on May 1 and now directly holds 0.
Ritu Shrivastava, vice president, sold 8,560 shares of common between $12.85 and $13.50 each from May 8-24 and now directly holds 33,596.
ATMEL CORP.
Mikes Sisois, vice president, sold 100,000 shares of common at $11.14 each on May 31 and now directly and indirectly holds 1,078,900.
LINEAR TECHNOLOGY CORP.
Hans J. Zapf, divisional officer, exercised an option for 10,000 shares of common at $6.19 each on May 21 and sold 10,000 shares at $56.71 each on May 21 and now directly and indirectly holds 50,000.
NOVELLUS SYSTEMS INC.
David C. Smith, vice president, exercised an option for 15,001 shares of common between $8.25 and $8.88 each on April 26 and sold 15,001 shares at $52.94 each on April 26 and now directly holds 9,163.
Karl B. Levy, vice president, exercised an option for 5,000 shares of common between $16.42 and $19.15 each on April 26 and sold 10,000 shares at $53.03 each on April 26 and now directly holds 19,306.
Peter R. Hanley, vice president, exercised an option for 100,000 shares of common at $10.04 each on April 27 and sold 100,000 shares at $52.32 each on April 27 and now directly holds 153,666.
Richard S. Hill, chairman of the board, exercised an option for 310,806 shares of common between $9.25 and $10.04 each from April 19-30 and sold 300,000 shares between $50.78 and $54.94 each from April 26-30. To cover the expenses of transaction, Hill turned in 1,771 of them and now directly and indirectly holds 148,934.
Robert H. Smith, chief financial officer, exercised an option for 93,750 shares of common between $11.08 and $25.56 each on April 26 and sold 93,750 shares at $53.12 each on April 26 and now directly holds 567.
William R. Spivey, director, sold 10,000 shares of common at $53.40 each on April 27 and now directly holds 8,000.
XICOR INC.
Louis Dinardo, president, purchased 10,000 shares of common at $5.00 each on May 2 and now directly holds 10,000. |
