Replies to post #17856 on InterDigital Inc (IDCC)

[ed_ferrari]

bulldzr, I personally haven't been bothered by the insider sales... until today. Harry can kiss my #%!. If anyone disagrees with me, I've got 300 shares up for sale at 19.80 in the afterhours market. Go get 'em!

[postyle]

hiya Bulldzr :)

you said, "I agree with ronnie and others re the seeming over the top insider sales and upper management compensation."

My question is why does this become such an issue after sales are reported?

Obviously we know these people are compensated with salary and stock options. But the moaning almost always comes after the selling.

Disagreeing with the overall compensation packages and the decisions by the compensation committee are one thing. Getting miffed because of insider sales is another. They are not the same thing.

Most people don't get mad when the company executives cash their checks. Exchange their company car for a newer model. Or expense their high priced meals and travel bills.

But the selling of the stock. Liquidating the option. That's what triggers the reaction of the individual investor.

One could answer my initial question (why does this become such an issue after sales are reported?) with the usual responses:

* sales display lack of confidence in future stock prices
* sales bring compensation issues to the foreground
* sales dissuade individual/institutional investors as well as analysts

To which there will be the usual rebuttals:

* insiders' confidence in future stock price increases is not measured in willingness to maintain highly concentrated net worth
* if it takes a sale to bring up the compensation issue, perhaps it was not that imbalanced in the first place
* most analysts/institutional side investors discount insider sales -- as mandated per empirical research

So, bulldzr, you're probably wondering... what's my point? Hehehe, I don't really have one point.

I just figured I would get this out of the way and save the need for future responses (at least my own responses). There are two sides to every coin, and this issue is no different.

But from where I am standing, me thinks the insider sales issue -- and the negative responses it generates -- is more connected to short-term performance than anything else. And of course, this short-term performance directly relates to the unhappiness of the average investor...

...even if he/she is not a short-term owner of the stock.

[Danny Detail]

Bull .. RE:"If you could please provide a reasonable and believable explanation of how these sales are in any way whatsoever "positive" for the share price of IDCC, I would surely welcome it."

I have not seen anyone on this board, at any time, suggest that insider sales are a "positive" for the share price. Anyone who believes that insider selling could ever conceivably be viewed as a positive for the share price IMO should not be managing their own money.

Having said that, in my experience perhaps no issue of investment significance more clearly delineates the difference between institutional money managers, "professionals" if you will, and individual investors than their differing interpretation of the extent to which insider selling is reflective of a negative view on the part of insiders of the company's future prospects. Most individual investors see it as a clear signal that management has hyped the company's prospects for the express purpose of bailing out at the shareholders expense. Institutions, on the other hand, typically see it as nothing more than the realization of earned incentive compensation on the part of insiders making such sales. Am I certain which is the right conclusion in the case of IDCC. Of course not. But, FWIW there could be many reasons why I would sell my IDCC shares and insider selling isn't even on the first page.

Regards,