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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.

NameTitleTrade DateShares SoldRule 10b5-1Current OwnershipDecrease In Ownership
Carl BassCEOJan 2-6817,500Yes372,808 shares + 94,111 options63.6%
Lorrie NorringtonDirectorJan 26,734No17,200 shares28.1%
Steven BlumSVPDec 3145,000Yes90,517 shares + 15,000 options29.9%
Kris HalvorsenDirectorDec 17-2430,000No22,562 shares + 10,000 options48.0%
Pascal Di FronzoSVPDec 2445,000No34,385 shares + 33,239 options40.0%
Mark HawkinsCFODec 2013,750Yes62,136 shares + 11,468 options15.7%
Steven WestDirectorDec 1920,000No24,905 shares44.5%
Crawford BeveridgeDirectorDec 167,000Yes37,473 shares + 10,000 options12.9%

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.

MonthInsider selling / sharesInsider buying / shares
January 2014824,2340
December 2013330,7500
November 201322,5020
October 2013129,2030
September 2013422,4230
August 201332,1040
July 201320,4820
June 20134,0000
May 201337,5000
April 2013275,0000
March 2013110,4510
February 201300
January 201350,4580

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

Outlook

Autodesk's guidance is as follows:

Q4 FY2014FY2014
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

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.

CompanyADSKADBEDASTYPTC
Market Cap:11.33B29.41B15.21B4.15B
Employees:7,300N/A10,7136,000
Qtrly Rev Growth (yoy):0.01-0.10-0.010.06
Revenue:2.29B4.06B2.67B1.29B
Gross Margin:0.880.860.870.71
EBITDA:461.80M769.06M824.77M265.97M
Operating Margin:0.140.110.240.15
Net Income:249.40M289.98M440.23M143.77M
EPS:1.090.563.461.19
P/E:46.05105.1835.1029.47
PEG (5 yr expected):3.744.512.491.13
P/S:4.897.265.733.20
P/B:5.184.374.604.47

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.

CompanyInsider buying / sharesInsider selling / shares
ADBE0159,909
DASTYN/AN/A
PTC00

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.