The dollar volume of both insider buying and selling decreased quite dramatically last week, partly because of the holiday-shortened week. Nonetheless, the four-day workweek does not fully explain the huge decline in insider trading activity. The end of the first quarter of 2016 is a few days away and the first-quarter earnings season is set to kick off in early April, so some companies may be entering their quiet periods prior to quarterly earnings announcements. Therefore, it is no wonder why insider trading activity on both the buy and sell side slowed significantly last week. However, it should be noted that insider buying decreased more significantly than insider selling last week, so the ratio insider selling to insider buying ratio increased quite notably relative to the previous week. In fact, corporate insiders sold around 16-times the dollar volume of purchases during last week, versus a ratio of roughly five registered for the prior week. Leaving the discussion about insider trading trends aside, let’s proceed to the discussion of several noteworthy insider sales recently witnessed at three companies.
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Cisco Systems Inc. (NASDAQ:CSCO) had three different insiders unload shares last week, one of whom sold only freshly-exercised stock options. So let’s take a look at the company’s insider selling that was not conducted under pre-arranged trading plans or associated with stock options. To start with, Chris Dedicoat, Executive Vice President of Worldwide Sales, sold 31,800 shares on Thursday at prices that ranged from $27.93 to $27.94 per share, cutting his overall holding to 346,253 shares. Pankaj Patel, Executive Vice President and Chief Development Officer of Global Engineering, offloaded 20,000 shares on Tuesday, 3,000 shares on Wednesday, and 12,814 shares on Thursday at prices that fell between $27.90 and $28.28 per share, all of which were held through a trust fund called Trust #1. Mr. Patel, set to leave Cisco Systems Inc. (NASDAQ:CSCO) in the second half of 2016, holds a direct ownership of 406,307 shares and owns an additional 297,388 shares through Trust #1 (141,015 shares), Trust #2 (128,005 shares), and Trust #3 (28,368 shares).
The network giant designs and markets a wide variety of products, offers services and integrated solutions aimed at developing and connecting networks around the world. The company’s growth strategy involves buying up small tech companies rather than channeling massive capital towards research and development activities. Cisco Systems usually acquires in excess of ten companies each year and 2016 is not going to be an exception. At the beginning of the previous week, Cisco’s Chief Executive Officer, Chuck Robbins, announced the reorganization of the company’s engineering units into four new teams: Networking and Market Segments; Cloud Services and Platform; IoT and Applications; and Security. The freshly-announced move will most likely enable the company to focus on key areas of growth, some of which are facing fast-toughening competition. Just recently, Rod Hall, analyst at J.P. Morgan, said that Alphabet Inc. (NASDAQ:GOOGL)’s Google division is anticipated to announce new customer wins for its Google Cloud Platform, suggesting that Cisco’s position in the cloud space might be suffering as a result. “We note that this is one of the primary drivers of data center infrastructure commoditization, in our opinion, which we believe is ultimately negative for Cisco and other data center infrastructure exposed companies”, said the analyst in a note. Shares of Cisco have gained almost 3% since the beginning of 2016, fully recovering from the major pullback experienced at the beginning of the year. The smart money sentiment towards the network giant declined in the fourth quarter of 2015, as the number of funds with stakes in the company dropped to 60 from 67 quarter-over-quarter. Donald Yacktman’s Yacktman Asset Management cut its stake in Cisco Systems Inc. (NASDAQ:CSCO) by 15% during the October-to-December period to 31.04 million shares.
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The next pages of this insider trading article discuss the insider selling activity registered at Ross Stores Inc. (NASDAQ:ROST) and DexCom Inc. (NASDAQ:DXCM).
