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In this article, I will feature one tech stock that has seen intensive insider selling during the last 30 days. Intensive insider selling can be defined by the following three criteria:

  1. The stock was sold by three or more insiders within one month.
  2. The stock was not purchased by any insiders in the month of intensive selling.
  3. At least two sellers decreased their holdings by more than 10%.

Autodesk (NASDAQ:ADSK) operates as a design software and services company worldwide. Its Platform Solutions and Emerging Business segment offers AutoCAD software.


(Click to enlarge)

Insider selling during the last 30 days

Here is a table of Autodesk's insider-trading activity during the last 30 days by insider.

Name Title Trade Date Shares Sold Rule 10b5-1 Current Ownership Decrease In Ownership
Hallam Dawson Director Oct 3-4 40,000 No 76,564 shares 34.3%
Kris Halvorsen Director Oct 3-4 29,203 No 22,562 shares 56.4%
Jan Becker SVP Sep 26-Oct 2 75,000 Yes 80,898 shares + 26,611 options 41.1%
Pascal Di Fronzo SVP Sep 30 423 Yes 34,385 shares 1.2%
Carl Bass CEO Sep 26 400,000 Yes 372,808 shares 51.8%
Crawford Beveridge Director Sep 16 7,000 Yes 39,473 shares + 15,000 options 11.4%

There have been 551,626 shares sold by insiders during the last 30 days. More details about the Rule 10b5-1 trading plan can be found from this link.

Insider selling by calendar month

Here is a table of Autodesk's insider-trading activity by calendar month.

Month Insider selling / shares Insider buying / shares
October 2013 129,203 0
September 2013 422,423 0
August 2013 32,104 0
July 2013 20,482 0
June 2013 4,000 0
May 2013 37,500 0
April 2013 275,000 0
March 2013 110,451 0
February 2013 0 0
January 2013 50,458 0

There have been 1,081,621 shares sold and there have been zero shares purchased by insiders this year. The month of September has seen the most insider selling.

Financials

Autodesk reported the fiscal 2014 second-quarter, which ended July 31, financial results on August 22 with the following highlights:

Revenue $561.7 million
Net income $61.7 million
Cash $2.4 billion
Debt $0.7 billion

Outlook

Autodesk's guidance for the fiscal 2014 third quarter, ending October 31, is as follows:

Revenue $540-$555 million
EPS GAAP $0.19-$0.23
EPS Non-GAAP $0.36-$0.40

Competition

Autodesk's competitors include Adobe Systems (NASDAQ:ADBE), Dassault Systemes SA (OTCPK:DASTY), and Parametric Technology Corporation (PMTC). Here is a table comparing these companies.

Company ADSK ADBE DASTY PMTC Industry Average (Technical & System Software)
Market Cap: 9.14B 26.28B 14.10B 3.34B 125.72M
Employees: 7,300 11,144 9,522 5,987 413.00
Qtrly Rev Growth (yoy): -0.01 -0.08 0.04 0.01 0.18
Revenue: 2.29B 4.17B 2.68B 1.27B 69.26M
Gross Margin: 0.89 0.86 0.87 0.71 0.44
EBITDA: 464.80M 970.08M 831.45M 252.92M 3.89M
Operating Margin: 0.14 0.16 0.24 0.14 0.06
Net Income: 221.20M 447.00M 431.35M 3.32M N/A
EPS: 0.96 0.88 3.40 0.03 0.02
P/E: 42.76 60.15 33.19 1,001.07 19.68
PEG (5 yr expected): 3.06 3.34 N/A 1.00 1.43
P/S: 4.00 6.31 5.46 2.65 1.40

Autodesk has the second lowest P/S ratio among these four companies.

Here is a table of these competitors' insider-trading activities this year.

Company Insider buying / shares Insider selling / shares
ADBE 5,000 2,564,483
PMTC 0 372,853

Adobe Systems has also seen intensive insider selling during the past 30 days.

Conclusion

There have been six different insiders selling Autodesk and there have not been any insiders buying Autodesk during the past 30 days. Five of these six insiders decreased their holdings by more than 10%. Autodesk has an insider ownership of 0.30%.

Autodesk is trading at a P/E ratio of 42.76 and a forward P/E ratio of 25.14. The company has a book value of $9.19 per share.

Before entering short Autodesk, I would like to get a bearish confirmation from the Point and Figure chart. The main reason for the proposed short entry is the intensive insider selling activity.

Source: Insiders Are Selling Autodesk