Don't Ignore This Massive Insider Selling at 3D Systems

In the following video, Motley Fool industrials analyst Blake Bos takes a look at 3D Systems (NYSE: DDD  ) , and how several of the company's top executives sold off large portions of their positions in the company during the month of May. Blake tells investors why this may mean that shares are overpriced at the moment, and gives us a picture of what his investing strategy would be in the additive manufacturing space today.

3D Systems is at the leading edge of a disruptive technological revolution, with the broadest portfolio of 3-D printers in the industry. However, despite years of earnings growth, 3D Systems' share price has risen even faster, and today, the company sports a dizzying valuation. To help investors decide whether the future of additive manufacturing is bright enough to justify the lofty price tag on the company's shares, The Motley Fool has compiled a premium research report on whether 3D Systems is a buy right now. In our report, we take a close look at 3D Systems' opportunities, risks, and critical factors for growth. You'll also find reasons to buy or sell the stock today. To start reading, simply click here now for instant access.

Read/Post Comments (4) | Recommend This Article (7)

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  • Report this Comment On May 19, 2013, at 1:50 PM, TangoXray7 wrote:

    Once in awhile it's nice to hear a simple, strait forward, nuts and bolts stock analysis. No complicated discussion of forward earnings, book value or anything else, just basic facts.

    The big holders in charge of the company with inside information are selling significant positions. Look no further.

  • Report this Comment On May 20, 2013, at 11:19 AM, 1wiley1 wrote:

    All this stock was sold on May 14 for $40. Why would "an insider" sell stock for $40 when the price closed that day at $48.86. Because it was a planned sale. In addition to the $250 million from 3D Systems, certain stockholders, including certain officers and directors and their affiliates, are offering an aggregate of approximately 1.3 million shares in the offering. The sale was set at $40. The underwriters exercised their over-allotment option to purchase an additional 1,125,000 shares of 3D Systems Corporation common stock.

  • Report this Comment On May 22, 2013, at 5:33 PM, TMFBos wrote:

    @ TangoXray7: Thanks for the compliment!

    @ 1wiley1

    Why would an insider sell at $40 when shares were trading at 48 is a great point to make. On page 23 of the prospectus for the offering you can find this:

    "We have registered these shares of our common stock to permit selling stockholders to resell

    their shares of our common stock when they deem appropriate."

    What essentially happens is company insiders can sign up for the offering ahead of time to sell their shares at the specified offering price, $40/share here. The prospectus is dated May 7th, so you can make your best "guess", but the insiders would have allotted their desired shares to be sold sometime earlier than May 7th. This would have been when the shares were valued below $40/share in the public markets. So it made great sense for insiders to sell at that point in time.

    The real takeaway here is that key insiders sold a significant amount of shares at $40/share, which they hypothetically thought valued the business appropriately or richly. Otherwise logic would dictate they hold the shares until they reflected what the holders felt was a fair value.

    Also of note, Director Daniel Van Riper sold 17,220 shares on 05/17/2013 or roughly 30% of his shares, which was unaffiliated with the offering.

    Lots of insiders appear to be voting with their pocket books.

  • Report this Comment On May 27, 2013, at 8:12 AM, 3DStockHub wrote:

    Hello Blake,

    DDD's insider selling is in stark contrast to the insider buying at FARO (an non-hyped 3D Printing scanner company). The CFO bought $137,000 of FARO stock in the open market in the first week of May. Based on his salary (under $250k), that was not an insignificant purchase.

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