On Friday August 1st, Qualcomm Chairman Paul Jacobs sold 70, 000 shares of the company at an average price of $73.71. Jacobs still owns 30, 041 shares in the chip maker. As of Tuesday August 5, shares of Qualcomm were down 0.23%.
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This insider selling follows 2 downgrades on July 31st by Sanford and Bernstein analysts from “Outperform” to “Market Perform.” The stock was upgraded to a “Buy” by an analyst from Nomura, but the price target was lowered from $90 to $85.
The earnings report on July 23rd saw a beat of analyst estimates by 22 cents, a 9% increase in revenues and news that it was issuing a dividend starting September.
After a strong performance by Qualcomm, why did Jacobs unload so many shares? Basically, when an insider sells shares, it isn’t always a negative tell into the fundamentals of a company. Often, he or she will see short-term headwinds, and will want to take profits in the stock and buy shares at lower prices in the teeth of a temporary crisis. In this case, that crisis could be issues with the Chinese government over an alleged monopoly and licenses. It isn’t rare for successful companies to face regulatory issues in China, and most do not face as severe and permanent a fate as Google, which has been banned from the country.
Qualcomm’s problems in China are likely to be resolved over a period of time and, while it doesn’t pay to second guess a Chairman, perhaps he was selling Qualcomm at a high and saw the upcoming decline over China a a buying opportunity.