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:
- The stock was sold by three or more insiders within one month.
- The stock was not purchased by any insiders in the month of intensive selling.
- At least two sellers decreased their holdings by more than 10%.
Autodesk (ADSK) operates as a design software and services company worldwide. Its Platform Solutions and Emerging Business segment offers AutoCAD software.
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%|
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|
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.
Autodesk reported the fiscal 2014 third-quarter, which ended October 31, financial results on November 21 with the following highlights:
|Net income||$57.6 million|
Autodesk's guidance is as follows:
|Revenue||$560-$580 million||$2,247-$2,267 million|
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|
Adobe Systems has also seen intensive insider selling during the last 30 days.
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.