NEW YORK (TheStreet) -- Autodesk (ADSK) - Get Report stock is higher by 9.20% to $63.15 in midday trading on Thursday, after activist investor Sachem Head Capital Management disclosed a 5.7% stake in the design software company and noted that its shares are undervalued. 

Sachem Head plans to speak with Autodesk's management about issues such as "business, management, operations (including cost structure), assets, capitalization, financial condition, strategic plans, governance and board composition," according to a regulatory filing on Wednesday, Bloomberg reports.

Autodesk CEO Carl Bass responded by claiming that activist investors focus solely on short-term returns, according to Bloomberg. 

Activist investors typically purchase upwards of 5% of a company's stock, and disclose their stake in a regulatory filing with the SEC in an effort to engage with corporate executives, Bloomberg notes.

Based in New York City, Sachem Head has more than $4 billion under management. 

Separately, TheStreet Ratings team rates AUTODESK INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:

We rate AUTODESK INC (ADSK) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • ADSK's debt-to-equity ratio of 0.78 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that ADSK's debt-to-equity ratio is mixed in its results, the company's quick ratio of 2.12 is high and demonstrates strong liquidity.
  • Despite the weak revenue results, ADSK has outperformed against the industry average of 18.8%. Since the same quarter one year prior, revenues slightly dropped by 4.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for AUTODESK INC is currently very high, coming in at 89.34%. Regardless of ADSK's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ADSK's net profit margin of -38.63% significantly underperformed when compared to the industry average.
  • Net operating cash flow has decreased to $77.20 million or 19.75% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, AUTODESK INC has marginally lower results.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Software industry and the overall market, AUTODESK INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: ADSK

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.