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Summary

  • 7 insiders sold Adobe stock within one month.
  • The stock was not purchased by any insiders in the month of intensive selling.
  • 6 of these 7 insiders decreased their holdings by more than 10%.

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

(click to enlarge)

Insider selling during the last 30 days

Here is a table of Adobe's insider activity during the last 30 days.

NameTitleTrade DateShares SoldOption Exercise & SaleRule 10b5-1Current OwnershipDecrease In Ownership
Richard RowleyVPJune 2413,835Yes & NoNo0 shares100%
Donna MorrisSVPJune 2335,618Yes & NoNo85,827
shares
29.3%
Bryan LamkinSVPJune 235,392NoNo5,392
shares
50.0%
David WadhwaniSVPJune 245,599YesNo25,000 shares18.3%
James DaleyDirectorJune 195,000YesNo20,674
shares + 74,704 options
5.0%
Matthew ThompsonEVPJune 1923,917YesNo50,875 shares32.0%
Shantanu NarayenCEOJune 19439,000YesYes258,737
shares + 622,633 options
33.2%

There have been 528,361 shares sold by insiders during the last 30 days. Shantanu Narayen sold his shares pursuant to a Rule 10b5-1 plan. 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 activity by calendar month.

MonthInsider selling / sharesInsider buying / shares
June 2014528,3610
May 201452,3950
April 2014205,2730
March 2014137,2880
February 201465,0000
January 2014514,4250
December 2013163,0100
November 201357,7400
October 20136,175,0000
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 10,397,975 shares sold and there have been 5,000 shares purchased by insiders since January 2013.

Financials

Adobe reported the fiscal 2014 second-quarter, which ended May 30, financial results on June 17 with the following highlights:

Revenue$1.1 billion
Net income$88.5 million
Cash$3.3 billion
Debt$1.5 billion

The stock spiked up $6 after these results and the seven insiders sold their shares after the spike.

Adobe's revenues peaked in 2012.

Outlook

Adobe's fiscal 2014 third-quarter guidance is as follows:

Revenue$975-$1,025 million
Non-GAAP EPS$0.22-$0.28
GAAP EPS$0.02-$0.08

(Source: Earnings presentation)

Competition

Adobe's competitors include Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), and Autodesk (NASDAQ:ADSK). Here is a table comparing these companies.

CompanyADBEAAPLMSFTADSK
Market Cap:36.14B543.93B342.76B12.71B
Employees:11,84780,30099,0007,600
Qtrly Rev Growth (yoy):0.060.05-0.000.04
Revenue:4.11B176.04B83.35B2.30B
Gross Margin:0.850.380.700.88
EBITDA:747.81M57.80B32.13B392.20M
Operating Margin:0.100.290.340.11
Net Income:283.89M37.71B22.43B201.50M
EPS:0.525.962.670.88
P/E:139.5815.1315.5563.47
PEG (5 yr expected):4.811.102.285.76
P/S:8.793.104.175.52

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

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

CompanyInsider buying / sharesInsider selling / shares
AAPL023,872
MSFT2,950,50140,139,400
ADSK01,128,446

Autodesk has also seen intensive insider selling during the last 30 days.

Conclusion

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

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

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

Source: Adobe: 7 Different Insiders Have Sold Shares This Month