Good News! Post Restored!

Good news! Post restored. I had posted #9197 in response to Putnid’s concerns about the CEO of INFN selling out 90% of his position. I pointed out that a MF service had recently sold out a third of their AMBA because of concerns about insider selling. The CEO had sold 90% of his position and other insiders had sold a lot, and that AMBA was up 100% since they started selling. And that in the 6 weeks since MF sold, AMBA had had a huge beat, the price is up over 30%, and that the insider sales didn’t mean much. They sell for all kinds of reasons, and they may have lots of options that haven’t yet vested.

Well MF pulled my post because I quoted the MF service’s recommendation in showing that it was a direct parallel with what Putnid was saying. I appealed, pointing out that the quote was used as a illustration of a point, not giving away proprietary information, and that it was way out of date anyway, as the stock price had moved 30% since then. They reconsidered and reinstated the post! Here it is again:


Hi Putnid. Here’s what Supernova said on April 16 when they sold a third of AMBA. If you don’t see an exact parallel with what you are saying, that’s not my problem. All I can do is post it.


By the way, AMBA just posted a huge beat with revenue up 73%, adjusted earnings up almost 200%, increased margins, etc. So much for insider selling.

Here’s Supernova’s rational for selling:

There has been a lot of insider selling ever since the company went public in fall 2012. Normally, I don’t pay too much attention to this. As the popular wisdom goes, insiders sell for many reasons. However, the scale and pace of these sales raised an alarm in my mind.

When Rule Breakers recommended Ambarella in September 2013, co-founder and CEO Fermi Wang owned 1.2 million shares, which represented 4.4% of the company, according to filings tracked by S&P Capital IQ. Today, he owns just 141,158 shares, less than 0.5% of the company.

Both of the other two co-founders (Leslie Kohn and Didier LeGall) have also significantly reduced their holdings. And CFO George Laplante is down by more than 50% from his highest level.

Despite launching a 43-post discussion on RB’s Ambarella board, I still haven’t found a satisfactory reason why these upper-level insiders have sold so much of their stakes. Possibly they were cashing out to secure their own wealth, rather than leaving that to the vagaries of the market. I can see that, but the counter thought is that owning and operating a business is one of the best ways to become very wealthy (Steve Jobs didn’t start out rich). Therefore, why limit yourself by selling roughly 90% of your original holdings, as Wang has done?

Sounds familiar doesn’t it.


Yeh I think they pulled it due to embarrassment not proprietary info. Long AMBA. The lesson in this is that it sometimes takes guts and bravery to take positions contra to both insider and outside assessments to generate outstanding returns like yours Saul.
(Half expecting this post to be pulled but anyway.)

IN support of what Saul has said:

While insider buying is usually a good sign, don’t be alarmed by insider selling, unless there is a lot of it - insiders tend to buy because they have positive expectations, but they may sell for reasons independent of their expectations for the company

And another article describing the complexity of “insiders” both in defining that group and interpreting their actions:…

Bottom line, as Saul as stated, insider trading can be very difficult to interpret, particularly on the sell side.