Some Universal Display Corporation (NASDAQ:OLED) shareholders may be a little concerned to see that the Independent Director, Richard Elias, recently sold a substantial US$975k worth of stock at a price of US$193 per share. That's a big disposal, and it decreased their holding size by 27%, which is notable but not too bad.
The Last 12 Months Of Insider Transactions At Universal Display
Over the last year, we can see that the biggest insider sale was by the Executive VP & Chief Technical Officer, Julia Brown, for US$1.8m worth of shares, at about US$175 per share. That means that an insider was selling shares at slightly below the current price (US$186). As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. This single sale was just 15% of Julia Brown's stake.
In total, Universal Display insiders sold more than they bought over the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
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Insider Ownership
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. Universal Display insiders own about US$154m worth of shares (which is 1.8% 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?
The stark truth for Universal Display is that there has been more insider selling than insider buying in the last three months. Zooming out, the longer term picture doesn't give us much comfort. But it is good to see that Universal Display is growing earnings. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about the company. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Universal Display. For example - Universal Display has 1 warning sign we think you should be aware of.
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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 of direct interests only, but not derivative transactions or indirect interests.
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