Cisco Systems Inc. (CSCO), Ross Stores Inc. (ROST) and Others Witness Increased Insider Selling Lately

Let’s wrap up our discussion by analyzing the insider trading activity witnessed at DexCom Inc. (NASDAQ:DXCM). Executive Chairman Terrance H. Gregg unloaded 25,000 shares on Tuesday at $59.51 apiece, all of which were held in a trust fund that currently owns 276,064 shares. According to the Form 4 filing that disclosed this transaction, Mr. Gregg contributed the aforementioned block of shares to an exchange fund in exchange for shares of the exchange fund. Therefore, the Executive Chairman, who also holds a direct ownership stake of 477,328 shares, may be seeking to diversify his holdings, so the recent transaction should not serve as reason for concern among investors. The company registered massive insider selling in recent weeks and months, most of which, though, was conducted under pre-arranged trading plans.

DexCom is a medical device company that mainly focuses on designing and commercializing continuous glucose monitoring (CGM) systems used by people suffering with diabetes, as well as healthcare providers. The company has seen its shares advance 268% in the past five years, so the high insider trading activity on the sell side might not seem surprising. Nonetheless, the share price of the company’s stock has been on a slide late September, having declined 26% since the beginning of this year. DexCom’s 2015 product revenue reached $400.7 million, up from $257.1 million in 2014 and $157.1 million in 2013. The increase in the company’s top-line figure was mainly driven by higher sales volume of its disposable sensors, which were positively affected by the sustained growth in the installed base of customers using G4 PLATINUM and G5 Mobile systems and durable systems to existing and new customers. It is worth mentioning that the company’s product revenues are derived from the sale of durable CGM systems and disposable sensors. Each sensor is used continuously for approximately seven days, after which it should be replaced with a new disposable sensor. Therefore, the company’s top-line growth mainly depends on recurring sales of its disposable sensors, so its ability to grow its installed base of customers is of crucial importance. According to fresh estimates from the International Diabetes Federation, the number of individuals suffering with diabetes is anticipated to reach 642 million by 2040, up from a current number of 415 million. Hence, DexCom appears to be well-positioned to keep growing in the years and decades ahead. There were 34 hedge funds from our system with stakes in DexCom at the end of the fourth quarter, as compared to 30 registered at the end of the previous one. Jim Simons’ Renaissance Technologies owned 693,943 shares of DexCom Inc. (NASDAQ:DXCM) at the end of December 2015.

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