Autodesk: 8 Different Insiders Have Sold Shares During The Last 30 Days

Jan.11.14 | About: Autodesk, Inc. (ADSK)

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.

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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
Carl Bass CEO Jan 2-6 817,500 Yes 372,808 shares + 94,111 options 63.6%
Lorrie Norrington Director Jan 2 6,734 No 17,200 shares 28.1%
Steven Blum SVP Dec 31 45,000 Yes 90,517 shares + 15,000 options 29.9%
Kris Halvorsen Director Dec 17-24 30,000 No 22,562 shares + 10,000 options 48.0%
Pascal Di Fronzo SVP Dec 24 45,000 No 34,385 shares + 33,239 options 40.0%
Mark Hawkins CFO Dec 20 13,750 Yes 62,136 shares + 11,468 options 15.7%
Steven West Director Dec 19 20,000 No 24,905 shares 44.5%
Crawford Beveridge Director Dec 16 7,000 Yes 37,473 shares + 10,000 options 12.9%
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There have been 984,984 shares sold by insiders during the last 30 days. Carl Bass, Steven Blum, Mark Hawkins, and Crawford Beveridge sold shares pursuant to the Rule 10b5-1 plan.

SEC Rule 10b5-1 is a regulation enacted by the United States Securities and Exchange Commission (SEC) in 2000. The SEC states that Rule 10b5-1 was enacted in order to resolve an unsettled issue over the definition of insider trading, which is prohibited by SEC Rule 10b-5. After Rule 10b5-1 was enacted, the SEC staff publicly took the position that canceling a planned trade made under the safe harbor does not constitute insider trading, even if the person was aware of the inside information when canceling the trade. This staff interpretation raises the possibility that executives can exploit this safe harbor by entering into 10b5-1 trading plans before they have inside information while retaining the option to later cancel those plans based on inside information.

For example, a CEO of a company could call a broker on January 1 and enter into a plan to sell a particular quantity of shares of his company's stock on March 1, find out terrible news about his company on February 1 that will not become public until April 1, and then go forward with the March 1 sale anyway, saving himself from losing money when the bad news becomes public. Under the terms of Rule 10b5-1(b) this is insider trading because the CEO "was aware" of the inside information when he made the trade. But he can assert an affirmative defense under Rule 10b5-1(c), because he planned the trade before he learned the inside information.

In general, it is a safer way for an insider to sell shares pursuant to a Rule 10b5-1 trading plan than without it.

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
January 2014 824,234 0
December 2013 330,750 0
November 2013 22,502 0
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
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There have been 2,259,107 shares sold, and there have been zero shares purchased by insiders since January 2013. The month of January 2014 has seen the most insider selling.

Financials

Autodesk reported the fiscal 2014 third-quarter, which ended October 31, financial results on November 21 with the following highlights:

Revenue $555.2 million
Net income $57.6 million
Cash $2.5 billion
Debt $0.7 billion
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Outlook

Autodesk's guidance is as follows:

Q4 FY2014 FY2014
Revenue $560-$580 million $2,247-$2,267 million
EPS GAAP $0.09-$0.16 $0.84-$0.90
EPS Non-GAAP $0.29-$0.36 $1.55-$1.61
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Competition

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

Company ADSK ADBE DASTY PTC
Market Cap: 11.33B 29.41B 15.21B 4.15B
Employees: 7,300 N/A 10,713 6,000
Qtrly Rev Growth (yoy): 0.01 -0.10 -0.01 0.06
Revenue: 2.29B 4.06B 2.67B 1.29B
Gross Margin: 0.88 0.86 0.87 0.71
EBITDA: 461.80M 769.06M 824.77M 265.97M
Operating Margin: 0.14 0.11 0.24 0.15
Net Income: 249.40M 289.98M 440.23M 143.77M
EPS: 1.09 0.56 3.46 1.19
P/E: 46.05 105.18 35.10 29.47
PEG (5 yr expected): 3.74 4.51 2.49 1.13
P/S: 4.89 7.26 5.73 3.20
P/B: 5.18 4.37 4.60 4.47
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Autodesk has the highest P/B ratio among these four companies.

Here is a table of these competitors' insider-trading activities during the last 30 days.

Company Insider buying / shares Insider selling / shares
ADBE 0 159,909
DASTY N/A N/A
PTC 0 0
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Adobe Systems has also seen intensive insider selling during the last 30 days.

Conclusion

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

There are seven analyst buy ratings, 12 neutral ratings, and zero sell ratings with an average price target of $48.71. Before entering short Autodesk, I would like to get a bearish confirmation from the Point and Figure chart. The two main reasons for the proposed short entry are bearish analyst price targets, and the intensive insider-selling activity.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.