Want help predicting when Kogan.com’s CEO Ruslan Kogan and CFO David Shafer are going to be selling shares? Well, if it’s a trading window, they will almost certainly be selling at some point. But to narrow it down from that, it seems you only need to watch for one thing: the announcement of a new business line.
Back in June, Kogan.com got a sweep of complimentary coverage as it announced a new expansion into whitegoods. It’s share price rose 7.5 per cent that day. And that night, Kogan and Shafer tried to offload $100 million worth of stock (unsuccessfully at that point, but they did sell half that amount later).
This week, they used the same MO. After market close last Friday, Kogan revealed a new push into home loan lending. The share price rose 3 per cent at Monday’s open. And that evening, the business’ founders were selling 6.25 million shares for $40 million.
It would be insider trading if Kogan and Shafer bought or sold shares while planning a significant, unannounced business deal. But by selling immediately after such announcements, it looks like they’re trying to divest while the hype is at its hottest. Which might work for them, but we doubt it’s as appreciated by other shareholders, who invariably see a short-term, announcement-related price spike that’s utterly undone by a deep fall once the director sales are revealed. The share price tumbled another 9 per cent to $6.40 on Tuesday.
In a statement on Tuesday, Kogan.com chairman Greg Ridder said there was “very substantial interest from new and existing shareholders” in buying Kogan and Shafer’s shares. No wonder when you consider that the shares are trading 34.6 per cent lower than they were when Kogan and Shafer tried to make that first aborted sale in June, and that Monday’s sale was offered at an 8.8 per cent discount to Monday’s closing price. We’re not sure moving stock in a fire-sale is something to write home about.