Kodak's Insider Activity: Betting on a Legacy Brand's Comeback Amid Legal Shadows

Eastman Kodak (KODK), once synonymous with photography, has long been a company in transition. From its near-bankruptcy in the 2010s to its controversial pivot into pharmaceuticals during the pandemic, Kodak's history is marked by dramatic shifts. Now, in 2025, a mix of insider transactions and lingering legal issues paints a complex picture of a company seeking to redefine itself. Could recent insider buying signal confidence in Kodak's undervalued stock, or is this activity a distraction from unresolved scandals?

The Insider Activity: A Mosaic of Moves

Recent SEC filings reveal a flurry of insider transactions in early 2025. Notably:
- Philippe D. Katz, a director and 10% owner, disposed of 170,026 shares of common stock on May 20, 2025. However, he also converted 19,921 RSUs into phantom stock under Kodak's deferred compensation plan for directors. Phantom shares, payable upon his departure, suggest a long-term bet on Kodak's recovery.
- James V. Continenza, Kodak's CEO, has filed multiple Form 4 reports this year, though his activity is overshadowed by a 2021 court ruling that found him guilty of insider trading. In 2020, he bought shares before the announcement of a $655 million federal loan to pivot into pharmaceuticals—a move that sent Kodak's stock soaring to $60 from $2.22.

Katz's mixed moves—selling shares while retaining deferred equity—highlight a nuanced strategy. Disposing of direct holdings may reflect personal financial needs, while converting RSUs into phantom stock reinforces his commitment to Kodak's long-term success.

The Legal Overhang: A Cloud or a Catalyst?

Continenza's legal woes are a critical backdrop. His 2020 trades, which skirted insider trading rules, led to a $6.5 million settlement with New York's Attorney General in 2023. Kodak also falsely claimed his trades were pre-cleared, violating its own policies. These missteps damaged trust in leadership and governance.

Yet, the recent Form 4 filings—particularly the deferred compensation arrangements—suggest efforts to rebuild credibility. The conversion of RSUs into phantom stock aligns with stricter compliance, as insiders now tie their wealth to Kodak's long-term performance rather than short-term gains.

Valuation: Is Kodak Undervalued?

Kodak's stock trades at $12.00 per share (as of June 2025), near the strike price of some of Katz's stock options. This raises questions:
- Why would insiders hold options at $12 if they believed the stock was undervalued?
- Could the $12 strike price signal a floor, or is it a coincidence?

Kodak's valuation multiples also paint an intriguing picture. With a P/E ratio of 8.5x and a price-to-book ratio of 1.2x, it's trading at a discount to peers like Fujifilm (which trades at 15x P/E). This suggests the market discounts Kodak's risks, but also hints at potential upside if operations stabilize.

Strategic Shifts: Beyond Film and Scandals

Kodak's pivot into pharmaceuticals and imaging technology for healthcare (e.g., 3D printing of drug ingredients) has created new revenue streams. The 2021 federal loan—controversial as its origin was—funded a $350 million pharmaceutical division, now contributing 30% of revenue.

The Form SD filed in May 2025, disclosing conflict minerals sourcing, underscores compliance with modern regulatory demands. While not a blockbuster move, it signals a focus on operational transparency.

The Investment Case: Speculative, but Not Necessarily Foolish

Kodak is a high-risk, high-reward play. The positives:
- Undervalued metrics: P/E and P/B ratios suggest the stock is priced for failure, not future growth.
- Insider incentives: Phantom stock and long-dated options align management's interests with long-term success.
- Diversified revenue: Pharmaceuticals and biotech could stabilize cash flows.

The negatives:
- Legal liabilities: Continenza's unresolved cases could lead to further settlements or fines.
- Execution risk: Kodak's history of pivots (from film to inkjet printers to pharmaceuticals) shows uneven success.

Investment Advice

For aggressive investors willing to bet on Kodak's turnaround, a small position (e.g., 2-3% of a portfolio) could be justified. Key catalysts to watch:
- Q2 2025 earnings (due August 7): Strong performance in pharmaceuticals or imaging tech could lift sentiment.
- Legal settlements: A resolution with New York's AG could remove uncertainty.
- Stock price performance vs. options: If the stock breaches $12, it could trigger a positive feedback loop.

Conclusion

Eastman Kodak's insider activity in 2025 reflects a mix of caution and confidence. While selling shares signals some near-term profit-taking, the retention of deferred equity and stock options at $12 suggests insiders see long-term value. The stock's valuation discounts its risks, but the path to success hinges on execution in new markets and resolving legal overhangs. For those with a high risk tolerance, Kodak's blend of undervaluation and strategic bets makes it a compelling, albeit speculative, opportunity.

Final Note: Always consult with a financial advisor before making investment decisions. Past performance does not guarantee future results.