Rubicon Technology (RBCN) Insider Selling: CEO, CFO Liquidate Entire Position

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08:52:53 pm on June 23, 2010

Just days ago Rubicon Technology (RBCN) closed on a public offering of more than 3 million shares, raising around $62 million.  In that offering, 834,000 shares were sold to the public by “selling stockholders” as indicated in the press release.  We know now that those selling stockholders include the CEO and CFO according to InsiderCow.com, both of which liquidated their entire position. CEO Raja Parvez sold all 200,000 shares for a cool $5.68 million pay day while CFO William Weissman sold all his 100,000 shares for $2.84 million.  Several other insiders sold millions worth in shares.

Yes, there are all kinds of reasons for insiders to sell, but when you have two key executives dumping their entire position in the company all in one shot and several other insiders cashing out, it raises the big red flag.  Considering RBCN has run up more than 10 fold in less than a year and a half, I’d be cashing out too!

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Add to that the fact the stock is hitting resistance at the all time high in 2008 and RBCN is flashing a clear sell signal.

Disclaimer: No, I don’t have a short position in RBCN with an interest in driving down the stock. I just call it like I see it and would be a seller up here even without the insider selling.

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Comments  

Your information regarding sales is erroneous. CEO and CFO sold significant portions, but by now means their entire position (see official SEC filing at this link http://sec.gov/Archives/edgar/data/1410172/000119312510140776/d424b5.htm )
Also, the large private equity investor (the largest shareholder), Cross Atlantic Technology Fund, took just 500,000 shares of 6.1mn shares off the table. Given they will need to sell 5.6mn shares some time down the road, I would think they will make investors happy with good news over coming months before they eventually screw up (as everyone in semiconductors ultimately does).

 

Jon, I am looking into this. The SEC report linked from InsiderCow indicated they didn’t have any shares remaining after the sale. The report you linked to indicate that the CEO would have sold about half his position while the CFO 75% of his position. Still a red flag, but I’ll update this post if I’m missing something. I didn’t say that all insiders liquidated positions completetely and as you say other insiders still have a large portion of their holding.

 

Thanks Tate, very reasonable response.

 

Tate – You never updated the main post, nor your one from today, to correct these facts. The CEO and CFO still hold very substantial positions, and probably (this part is conjecture) sold because they saw the opportunity to lock in millions of dollars for their families – financial security that wasn’t around for these guys a year or two ago, as they don’t have storied careers that provide them such opportunities elsewhere.

 

I have looked into this further and based on SEC Form4 linked from InsiderCow.com (I can provide a screenshot if requested), both the CFO and CEO completely sold out of their positions June 21st. Yahoo shows this as well. The important thing to take away is that insiders dumped huge positions when the stock was hitting major resistance around $35, a glaring sell signal which proved to be the top. While I wasn’t short RBCN, I wish I had been. I’ll be looking to go long should the stock approach the $15 level.

 
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