Michael Kors Holdings Ltd (KORS): Do You Want to Own This Stock if the Namesake is Cashing Out?

Page 1 of 2

On Feb. 19, Michael Kors Holdings Ltd (NYSE:KORS) announced plans for certain selling shareholders to sell up to 28.75 million shares in a secondary offering. The company confirmed the next day the pricing of the offering at $61.50. Should investors stick with a stock if insiders are unloading?

As an investor do you really want to own a stock where the insiders are fleeing the stock after a substantial run? One has to consider whether the stock is fully priced at these levels.

Michael Kors Holdings Ltd (NYSE:KORS)Secondary Offering Details

Selling shareholders are unloading 25 million shares in a secondary offering with the underwriters granted a 30-day option to purchase an additional 3.75 million shares. The secondary priced at $61.50 on Feb. 20 with an expected closing on Feb. 26.

The company, a global luxury lifestyle brand with a multi-channel strategy, announced the offering after the market closed on Feb. 19 when the stock closed at $64.84. It has since dropped to around $59 due to market conditions and primarily the investor concerns over large shareholders cashing out around a potential top.

Major Insiders Selling

Considering the company isn’t selling any shares, the concerns with investors are the size and willingness of insiders to cash out. The company has 200.6 million shares outstanding meaning that this offering entails 14.3% of the outstanding shares being added to the public float. More importantly, the value is over $1.5 billion, which is an abnormally high amount for the markets to absorb. The size places the offering as one of the largest in the last few years, exceeding all but a few initial offerings such as Facebook Inc (NASDAQ:FB).

The main sellers are Sportswear Holdings Limited, Michael Kors, and John D. Idol. Sportswear is selling an incredible 19.7 million shares prior to the over-allotment amount and could reduce the ownership stake to 4.3% from 15.6%. Even more importantly is the decision by CCO and namesake, Michael Kors, to unload at least 3 million shares and potentially reduce his stake from only 3.9% to as low as 2.2%. See table below for more details:

Writing on the Handbag

The recent trading action of Coach, Inc. (NYSE:COH) might be the cause of the large insiders jumping ship. Prior to the secondary announcement, Kors had reached a valuation comparative to that of Coach now. Sure that stock has plunged from nearly $80 to the current price of below $47, but the sellers might realize how fleeting this current valuation could become. Kors still needs to double to reach the revenue base of Coach.

Still as an insider, it would seem that reaching a valuation of where Coach peaked out at over $20 billion would be a likely and attainable goal if the company keeps on the existing path. Ralph Lauren Corp (NYSE:RL) is worth over $15 billion, providing another example of where the stock could reach in the future.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!