Stock Analysis

Insiders who sold InterDigital, Inc. (NASDAQ:IDCC) earlier this year probably made the right call as market cap dropped by US$97m

  •  Updated
NasdaqGS:IDCC
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By selling US$334k worth of InterDigital, Inc. (NASDAQ:IDCC) stock at an average sell price of US$63.05 over the last year, insiders seemed to have made the most of their holdings. After the stock price dropped 7.2% last week, the company's market value declined by US$97m, but insiders were able to mitigate their losses.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

However if you'd rather see where the opportunities and risks are within IDCC's industry, you can check out our analysis on the US Software industry.

InterDigital Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the Executive VP & Chief Licensing Officer, Eeva Hakoranta, for US$142k worth of shares, at about US$70.75 per share. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. The silver lining is that this sell-down took place above the latest price (US$42.54). So it is hard to draw any strong conclusion from it.

InterDigital insiders didn't buy any shares over the last year. You can see the insider transactions (by companies and 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!

insider-trading-volume
NasdaqGS:IDCC Insider Trading Volume September 25th 2022

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).

InterDigital Insiders Are Selling The Stock

The last three months saw significant insider selling at InterDigital. Specifically, insiders ditched US$192k worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.

Does InterDigital Boast High Insider Ownership?

Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. InterDigital insiders own about US$22m worth of shares. That equates to 1.7% of the company. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Do The InterDigital Insider Transactions Indicate?

Insiders haven't bought InterDigital stock in the last three months, but there was some selling. Looking to the last twelve months, our data doesn't show any insider buying. But since InterDigital is profitable and growing, we're not too worried by this. While insiders do own shares, they don't own a heap, and they have been selling. So we'd only buy after careful consideration. While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. In terms of investment risks, we've identified 1 warning sign with InterDigital and understanding it should be part of your investment process.

Of course InterDigital 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.

Valuation is complex, but we're helping make it simple.

Find out whether InterDigital is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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About NasdaqGS:IDCC

InterDigital

InterDigital, Inc., together with its subsidiaries, designs and develops technologies that enable and enhance wireless communications in the United States, China, South Korea, Japan, Taiwan, and Europe.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation5
Future Growth1
Past Performance3
Financial Health4
Dividends4

Read more about these checks in the individual report sections or in our analysis model.

Undervalued with adequate balance sheet and pays a dividend.