Replies to post #21116 on InterDigital Inc (IDCC)

[STINVESTOR]

Gamco:
OT (Just in case the powers-that-be) determine that a discussion of your premise that Officer/Insiders are selling huge blocks of shares to set up a Family Limited Partnership to pass on anticipated tremendous value increases in IDCC to heirs, is off topic.

First of all, assets in a Family Limited Partnership are valued on a COST basis in calculating the Gift Tax due, AFTER using up the current Lifetime Exclusion of $1,000,000 which increases in steps to $3,500,000 in 2010 (I believe) There is, in addition, the Annual Gift Tax Exclusion, each and every year (currently $11,000)

For a multiplicity of reasons, suffice to say, that IMO, your premise is very weak indeed.
STINVESTOR

[The Count]

Gamco, regarding the insider selling

Your analysis from the reference post may be absolutely correct, however I have to believe it assumes no appreciation in the stock. If the LFP took the cash it received and bought IDCC stock, then they would receive the benefits you describe and still participate in the growth of IDCC. Unless that is done, the tax and estate benefits would be far outweighed by the missed appreciation. Please don't tell me that selling at a lower price is more beneficial then selling at a higher price. Of course, if one were not confident in the future of their investment then it would be wise.

I believe officers have the right to sell their stock whenever they like (except as covered by the spirit and letter of the law on insider trading). It does not affect the long term price which is based on actual results. When a number of insiders make unscheduled sales in the same time frame it does not indicated good news around the corner to me.

See mscheres post 20864 for the context of the following.
IDCC's management are the "shovel/pan sellers". They promote the potential and are willing to take their money from those who are willing to chase the potential. The longer people believe in the dream (right or wrong), the more they make. If the dream comes to fruition, those who hit the jackpot are happy and most don't care how much they were gouged because that $15 pan collected gold, and they continue to cash in. If it does not work out, folks might be angry about the excess taken by the "shovel/pan seller", but no one can really do anything about it. Once we stop supplying them with the 20 cent pans they will have the same interest in the long term future that us gold diggers have. Until that time, don't fault them for acting in their own self interest. Why should they risk a guaranteed fortune that will take care of them and their children to go for a fortune that will take care of unborn generations.

I can understand the above rationale for insider selling, but please don’t try to spin it as smart financial planning no matter what the expectations for the stock. Isolated sales can be explained as personal needs. Widespread sales tell me that there is uncertainty in the near term. Doesn’t mean that Nokia won’t accept the ERICY rate without arbitration or that the indemnification is not going to be a significant barrier to licensing, but it means that the management of IDCC wasn’t sure of it when they sold.