The Kogan.com Ltd (ASX: KGN) share price will be on watch on Wednesday.
On Tuesday the ecommerce company’s shares surged a massive 12% higher to end the day at a record high of $22.99.
However, within minutes of the company’s shares closing at this record high, its CEO and CFO were selling down their stakes in the company.
What is happening?
According to the AFR, the company’s founders Ruslan Kogan and David Shafer are selling down their stakes by a sizeable $163 million.
The report reveals that Citi’s equities desk was in the market with the block trade of 7.3 million shares, which represents approximately 6.9% of Kogan’s total shares.
One positive is that these shares have an underwritten floor price of $21.60 and bids were being taken in 5 cent increments up to $22.25, according to terms sent to funds. This means the discount will only range from 6% to 3.2% compared to Kogan’s last close price.
Once the sale completes, Mr Kogan will have reduced his stake down to 15.3 million shares. This represents a 15% stake in the company, which I believe means his interests remain firmly aligned with shareholders.
It’s a similar story with co-founder and CFO David Shafer. Following the completion of these sales, Mr Shafer will own 6.1 million shares. This represents a 5.8% stake in the growing company.
This morning the company confirmed that this report is accurate.
Chairman, Greg Ridder, commented: “Following the significant increase in shareholder value, Ruslan and David have taken the opportunity to balance a portion of their investments while continuing to remain Kogan.com’s largest shareholders. Ruslan and David continue to love building the Business and are excited about the opportunities ahead. I take this opportunity to welcome some new shareholders to the Company, and also to recognise the ongoing interest of many existing shareholders to increase their ownership levels.”
What now?
Given their past history of selling once trading windows reopen following results releases, this selling may not come as a surprise to many investors.
However, large insider selling rarely goes down well with investors and can often weigh on a share price. In light of this, I wouldn’t be surprised if its shares dropped lower today.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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