AZPN Insiders Are Sending Big Signals With Recent Activity

The price of Aspen Technology's stock is nearing all time highs, but insiders have recently broken the long dearth of trades with huge liquidations, and this could mean that further upside is unlikely.

Aspen Technology Background

Aspen Technology, Inc. (Nasdaq: AZPN) was founded in 1981 and provides "vertical software," or software that is heavily utilized in one industry as opposed to horizontal software, which is utilized across many industries. Aspen's software is used to control industrial processes in chemicals, energy, and engineering industries. 

Aspen's stock has performed quite well recently with the share price up over 50% in the last year and now touching all-time highs at over $224. Additionally, Aspen has massively outperformed peers - the S&P Kensho Smart Factories Index ETF, which tracks companies like Aspen that produce technology for factories, is down 21% over the last year.

In fact, not only has Aspen performed well over the past year, it has performed incredibly well over the longer term period too. Plotting all available stock price data from Google shows us the following graph:

This growth is of course, extremely impressive, but we note that the growth is so rapid that the stock price appears to have a striking convex shape that is sometimes associated with bubbles. 

Aspen Technology Insider Trading

Now let's examine the recent purchases and sales by Aspen insiders. The plot is shown below:

(Subscribers to insidersentiment.com can, in addition to seeing our aggregated insider activity trackers, create charts like this for any public company and see exactly what those company's insiders are up to. We note that this chart ignores some presumably tax-related sales that appear under the code F, though including these sales doesn't alter the big picture.)

Here you can see transactions under codes P and S for Aspen insiders, and the peculiarity is immediately apparent. There have been basically no purchases or sales until the fall of this year when the stock price reached a peak, and 90% of all the shares that have been sold since September occurred on a single day in late November. On this day, President and CEO Antonio Pietri sold 125,807 shares for an average price above $230, representing over $29 million in total value sold. Additionally, Mr. Pietri was in possession of just over 220,000 shares before making these sales on November 21st. This means that the shares sold on this day represented over 57% of Mr. Pietri's total prior holdings.

Given the magnitude of this single sale and relation to his total holdings, we believe this transaction sends a negative signal and it will be interesting to see how the market finds Aspen's stock in the weeks and months to come.

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