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

Stock Chart

The stock that went public at the end of 2011 had just hit all-time highs around $65 when the offering was announced. Considering the stock had gained around 160% since the initial trading, one can’t blame insiders for taking profits on a stock that has greatly outperformed the sector large caps. See the chart below:

KORS Total Return Price data by YCharts

Conclusion

If Michael Kors is as brilliant of an investor as he is a fashion designer, than investors have no reason to stay in this stock. Naturally the offer’s impact to shareholders is limited as the company isn’t selling any stock but the real impact is massive. Not only will the float be considerably higher as the market must absorb $1.5 billion of stock, but now investors will undoubtedly hold back investments on concerns of the negative sign.

The company appears to have more growth so shorting the stock might not be wise, but the upside potential will be limited until the company can prove that this move didn’t signal a top.

The article Do You Want to Own This Stock if the Namesake is Cashing Out? originally appeared on Fool.com and is written by Mark Holder.

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