This article presents an overview of 5 Overvalued Stocks Insiders are Dumping Now. For a detailed overview of such stocks, read our article, 11 Overvalued Stocks Insiders are Dumping Now.
5. Cadence Design Systems Inc (NASDAQ:CDNS)
Number of Hedge Fund Investors: 72
Computation software company Cadence Design Systems Inc (NASDAQ:CDNS) shares have gained about 44% over the past one year. The stock recently saw insider selling when its CFO John Wall sold 21,700 shares of Cadence Design Systems Inc (NASDAQ:CDNS) at $311.40 on March 28. Since then the stock has lost about 1.6% in value.
Of the 933 funds tracked by Insider Monkey, 72 hedge funds had stakes in Cadence Design Systems Inc (NASDAQ:CDNS) as of the end of 2023.
4. Walt Disney Co (NYSE:DIS)
Number of Hedge Fund Investors: 89
Disney is trending in the news after the company won its proxy fight against Nelson Peltz. Disney was in a heated proxy fight with Nelson Peltz’s Trian Partners which was attempting to get two seats at the Walt Disney Co’s (NYSE:DIS) board.
Sonia Coleman, Walt Disney Co’s (NYSE:DIS) Senior Executive Vice President and Chief Human Resources Officer, sold 1,857 shares of Walt Disney Co (NYSE:DIS) on April 1 at $121.92 per share. Since this transaction the stock is up about 1%.
Madison Sustainable Equity Fund made the following comment about The Walt Disney Company (NYSE:DIS) in its Q3 2023 investor letter:
“During the quarter, we sold our positions in Bristol-Myers Squibb and The Walt Disney Company (NYSE:DIS). The Walt Disney Company is facing a difficult and uncertain transition in its core media business assets including the ESPN business and other linear media assets. These media assets are cash generative but face secular decline as consumers are cutting their expensive cable subscriptions and moving to alternative streaming options. This has resulted in a decline in operating profits for the media division. The media business has long-term fixed costs related to its sports broadcasting agreement with multiple sports leagues which will further pressure profits during this transition.”
3. Netflix Inc (NASDAQ:NFLX)
Number of Hedge Fund Investors: 89
Netflix Inc (NASDAQ:NFLX) co-founder and Chairman of the board of directors Reed Hastings on April 1 sold 20,566 shares of the streaming company at $610.42 per share. Since then the stock price is almost flat. Over the past one year Netflix Inc (NASDAQ:NFLX) shares have gained about 76%, with the stock’s PE ratio now touching 51. Wedbush Securities recently removed Netflix Inc (NASDAQ:NFLX) from its Best Ideas list, citing high expectations which would make it difficult for Netflix Inc (NASDAQ:NFLX) to impress investors. Wedbush said some growth drivers of Netflix Inc (NASDAQ:NFLX) are already priced in. However, the investment firm maintained its Outperform rating on the stock.
Sequoia Fund stated the following regarding Netflix, Inc. (NASDAQ:NFLX) in its fourth quarter 2023 investor letter:
“Exits last year included Netflix, Inc. (NASDAQ:NFLX), Bank of America and Micron. We opportunistically added to our Netflix position in late 2022, near what turned out to be the lows. We sold our shares in stages over the course of last year as the stock price recovered and the valuation of the business rose dramatically.”
2. Salesforce Inc (NYSE:CRM)
Number of Hedge Fund Investors: 131
Salesforce Inc (NYSE:CRM) President and COO Brian Millham on April 1 sold 24,453 shares of the CRM software company at $302.08 per share. Salesforce CEO Marc Benioff also sold 15,000 shares of Salesforce Inc (NYSE:CRM) at $301.72 on the same day. Benioff also sold 15,000 CRM shares on March 28 at $301.01 per share. Benioff kept selling the stock in droves last month. Parker Harris, Salesforce Inc (NYSE:CRM) co-founder and Slack’s CTO, also sold 4,200 shares of Salesforce Inc (NYSE:CRM) at $306.50 per share on March 26. Since then the stock is down 0.60%.
Polen Focus Growth Strategy stated the following regarding Salesforce, Inc. (NYSE:CRM) in its fourth quarter 2023 investor letter:
“In the fourth quarter, the top relative and absolute contributors to the Portfolio’s performance were Netflix, ServiceNow, and Salesforce, Inc. (NYSE:CRM).
Salesforce has continued to grow its revenues at what we see as a healthy rate despite market concerns about the impact of the weaker macroeconomy on its business and penetration rates in its core CRM offering. Even its most mature and largest offerings, Sales Cloud and Service Cloud, are still growing revenue at double-digit rates. In addition, management realized that their cost structure, especially in salespeople, had gotten too bloated. Over the past year and a half, the company has run a much more streamlined expense structure that has led to strong operating margin expansion and earnings growth. Importantly, we do not feel Salesforce has cut into its innovation or sales muscle through these cost cuts but has eliminated unnecessary excess fat from the organization.”
1. Nvidia Corp (NASDAQ:NVDA)
Number of Hedge Fund Investors: 173
Nvidia Corp (NASDAQ:NVDA) shares are up 220% over the past one year. The stock is now trading at 74 times earnings. Mark A. Stevens, a director at Nvidia Corp’s (NASDAQ:NVDA) board, on March 28 sold 11,000 shares of Nvidia Corp (NASDAQ:NVDA) at $905.65 per share. Since then the stock fell 1%.
Orbis Global Equity Strategy stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its fourth quarter 2023 investor letter:
“Never before has following the crowd made so much money. Nor, in our estimation, so little sense. But just look at the opportunities the crowd has left for those of us willing to take a different view. We could wax lyrical about the glaring difference in value between Korean banks priced at 4 times earnings, versus Apple at 28 times, despite diverging fundamentals—Apple is increasingly at risk of bans in China, while Korean banks could double their dividends.
Or how the thick margin of safety at Intel, backed by listed stakes and real saleable assets, compares to the slim margin for error at NVIDIA Corporation (NASDAQ:NVDA), trading at 13 times next year’s projected revenue. That revenue that could be competed away over time, while Intel’s semiconductor “fabs” in the US are increasingly valuable as the east and the west drift further apart.
Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below. You can also look at the Jim Cramer Says You Should Avoid These 11 Stocks and the Forget Magnificent Seven: Jim Cramer Likes These ‘Super 7’ European Stocks.
