Proto Labs Inc. (NYSE: PRLB) was one of the better IPOs of 2012, certainly when you consider all of the lame internet and social media IPOs which have led to serious wealth destruction. Now investors have to ask how they feel about the shares now that management and insiders are unloading shares. Since August 21 we have tracked the sale of nearly 300,000 shares by insiders and backers.
This company produces CNC machined and injection molded plastic parts and it still has quite a high growth opportunity ahead. Still, since we have seen so many insider sale notices in SEC filings it has been hard to not notice that shares have pulled back. On August 20, Proto Labs was at $33.93 and now shares are trading around $31.25. Investors will want to know that additional share sale registrations will allow for even more sales ahead. The total has come to more than $9 million in shares sold by insiders versus a current market cap of $747 million.
All that being said, it is important to realize that you would probably sell shares too. The IPO was only about 4.3 million shares and the price was $16.00 for its formal IPO price. You know these insiders have a much lower cost basis than that too. The lowest the shares have traded since the IPO is $24.93 and the stock briefly went over $41.00 before settling down around this level.
If you had huge gains of this magnitude, wouldn’t you lock in some of those big gains after everything you have seen in the markets? That being said, it is only likely to expect that more insiders will be selling shares too.
JON C. OGG
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