Don’t Ignore The Fact That This Insider Just Sold Some Shares In Universal Display Corporation (NASDAQ:OLED)

Some Universal Display Corporation (NASDAQ:OLED) shareholders may be a little concerned to see that the Independent Director, Lawrence Lacerte, recently sold a whopping US$6.2m worth of stock at a price of US$206 per share. However, it’s crucial to note that they remain very much invested in the stock and that sale only reduced their holding by 9.6%.

See our latest analysis for Universal Display

Universal Display Insider Transactions Over The Last Year

In fact, the recent sale by Lawrence Lacerte was the biggest sale of Universal Display shares made by an insider individual in the last twelve months, according to our records. That means that even when the share price was below the current price of US$216, an insider wanted to cash in some shares. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. While insider selling is not a positive sign, we can’t be sure if it does mean insiders think the shares are fully valued, so it’s only a weak sign. It is worth noting that this sale was only 9.6% of Lawrence Lacerte’s holding.

Over the last year, we note insiders sold 83175 shares worth US$13m. In the last year Universal Display insiders didn’t buy any company stock. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

NasdaqGS:OLED Recent Insider Trading, August 9th 2019
NasdaqGS:OLED Recent Insider Trading, August 9th 2019

Insider Ownership of Universal Display

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Universal Display insiders own about US$970m worth of shares (which is 9.5% of the company). This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

So What Do The Universal Display Insider Transactions Indicate?

An insider sold Universal Display shares recently, but they didn’t buy any. Looking to the last twelve months, our data doesn’t show any insider buying. But it is good to see that Universal Display is growing earnings. It is good to see high insider ownership, but the insider selling leaves us cautious. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

Of course Universal Display may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.