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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%.

Adobe Systems Incorporated (NASDAQ:ADBE) operates as a diversified software company worldwide.

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Insider selling during the last 30 days

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

NameTitleTrade DateShares SoldRule 10b5-1Current OwnershipDecrease In Ownership
Mark GarrettCFOOct 115,000Yes84,746 shares15.0%
Shantanu NarayenCEOOct 150,000Yes231,672 shares + 638,300 options5.4%
James DaleyDirectorSept. 2025,000No15,086 shares62.4%
Richard RowleyVPSept. 196,056No16,981 shares + 12,669 options17.0%

There have been 96,056 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 Adobe's insider-trading activity by calendar month.

MonthInsider selling / sharesInsider buying / shares
October 201365,0000
September 201396,0560
August 201365,0000
July 2013813,9390
June 2013450,2760
May 201300
April 2013324,0730
March 2013465,9620
February 201300
January 2013284,1775,000

There have been 2,564,483 shares sold and there have been 5,000 shares purchased by insiders this year.

Financials

Adobe reported the fiscal 2013 third-quarter, which ended August 30, financial results on September 17 with the following highlights:

Revenue$995.1 million
Net income$83.0 million
Cash$3.2 billion
Debt$1.5 billion

Outlook

For the fourth quarter of fiscal 2013, Adobe is targeting a revenue range of $1 billion to $1.05 billion.

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Competition

Adobe's competitors include Avid Technology (OTCPK:AVID) and Microsoft (NASDAQ:MSFT). Here is a table comparing these companies.

CompanyADBEAVIDMSFT
Market Cap:25.96B256.52M287.30B
Employees:11,1441,78799,000
Qtrly Rev Growth (yoy):-0.08-0.230.10
Revenue:4.17B622.45M77.85B
Gross Margin:0.860.520.74
EBITDA:970.08M7.43M30.10B
Operating Margin:0.16-0.030.34
Net Income:447.00M-69.93M21.86B
EPS:0.88-1.812.58
P/E:59.28N/A13.37
PEG (5 yr expected):3.34N/A1.54
P/S:6.230.413.69

Adobe has the highest P/S ratio among these three companies.

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

CompanyInsider buying / sharesInsider selling / shares
MSFT060,339,723
AVID00

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

Conclusion

There have been four different insiders selling Adobe and there have not been any insiders buying Adobe during the past 30 days. Three of these four insiders decreased their holdings by more than 10%. Adobe has an insider ownership of 0.38%.

Adobe is trading at a P/E ratio of 59.28 and a forward P/E ratio of 33.23. The company has a book value of $13.56 per share.

Before entering short Adobe, I would like to get a bearish confirmation from the Point and Figure chart. The two main reasons for the proposed short entry are relatively high P/S ratio and the intensive insider selling activity.

Source: Insiders Are Selling Adobe Systems