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Why Are Insiders Selling Down Kogan?

When insiders star selling down as is happening at Kogan investors start to get concerned.

Simply Wall Street said that they often see insiders buying up shares in businesses that ‘perform well over the long term’ but at Kogan more insiders have sold out than purchased shares.

Now questions are being raised about the future of the Company.

In the last twelve months insiders purchased 31.50k shares for AU$321 in the online retailer who has seen their share value rise during the COVID-19 epidemic.

However investigations reveal that there has been more insider selling at Kogan than buying.

7.33m shares were sold by insiders for AU$158m, in addition Founder, Ruslan Kogan, sold AU$114m at a price of $21.60.

Over the last year we saw more insider selling of Kogan.com shares, than buying. claims analysts Simply Wall Street, The sellers received a price of around AU$21.60, on average.

They calculated that insider are selling shares at around the current price of AU$20.68.

“While we don’t usually like to see insider selling, it’s more concerning if the sales take place at a lower price. We note that this (Ruslan Kogan) sale took place at around the current price,…it’s hardly a good sign the analyst said.

“We don’t gain confidence from insider selling below the recent share price. But we wouldn’t put too much weight on the insider selling. The chart below shows insider transactions (by companies and individuals) over the last year.

.com insiders own about AU$446m worth of shares (which is 21% of the company). Most shareholders would be happy to see this sort of insider ownership the analyst organisation claims, since it suggests that management incentives are well aligned with other shareholders, however some shareholders are concerned about the amount of time that the founders actually spend in the business or will spend going forward.

“While we feel good about high insider ownership of Kogan.com, we can’t say the same about the selling of shares. So while it’s helpful to know what insiders are doing in terms of buying or selling, it’s also helpful to know the risks that a particular company is facing. At Simply Wall St, we found 1 warning sign for Kogan.com that deserve attention” the analysts said.

They concluded ‘Kogan.com may not be the best stock to buy’.

Footnote: Insiders are those individuals who report their transactions to the relevant regulatory body.

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