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Guidewire Software, Inc. Message Board

  • crkenmore crkenmore Sep 5, 2012 3:45 PM Flag

    Guidewire Guidance

    A yellow caution sign. Company management frequently diversifies their holding, via preplanned program trading. This is not extraordinary. Seven outside directors selling since July 22 can tell a different story. Guidewire has realized 6.8 million shares sold by outside directors, recently at prices from $ 24.30-$28.00. This represents, in aggregate, nearly 19 days trading volume.
    The stock, however, has increased steadily since August 14 from $ 24.64- $ 32.21 today. Is it possible that fools are walking in where wise men fear to tread?

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    • I believe you are right. Very sophisticated long term investors have ongoing sales to unwind their positions from January continuing through October and possible well beyond. These include Bay Mgmt, Presidio Mgmt, Steven Krausz, Neal Dempsey, and others. I expect this very large insider selling, will continue to constrain the stock price for sometime. Be particularly alert to insiders using the expected strong reception to the upcoming WDAY IPO, as an opportunity for additional selling. At a PE of 127, and 5 year PEG of nearly 10 the stock price already reflects strong revenue and margin growth expectations.Furthermore any pullback in the broader market failure to meet lofty expectations in the December 3 quarterly release, could result in a precipitous share price decline. Breaching the 150 SMA of $ 27.67, or even challenging the August 15 low of $ 24 is plausible. This may indeed be a stock where " fools are walking in where wise men fear to tread ".

    • you are likely right. If the co's valuation were not so high, I might disagree. But with a share price of $30 and est of .27 eps for the current yr ending in JULY 2013, and est of just .40 eps for the yr ending in JULY 2014, there isnn't much room for error here, and with the IPO lockup expired I think you'll see increasing weakness in the stock in the mos ahead.

 
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