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Kogan.Com Ltd (ASX:KGN) share price down 11% on share sale talk

Source: Kogan presentation

The Kogan.Com Ltd (ASX: KGN) share price is currently down 11% after management supposedly were looking to sell some of their shares.

According to the AFR fund manager sources, Canaccord Genuity, Macquarie Group Ltd (ASX: MQG) and UBS were looking to sell about 10% of Kogan.Com’s total shares on issues, which were owned by founder Ruslan Kogan and chief financial officer David Shafer.

This afternoon Kogan made an ASX announcement noting the media speculation about the sale of shares by Mr Kogan and Mr Shafer. The company said that the management pair did not receive a bid that was acceptable to them and therefore no transaction took place.

It may not have been a good look for Kogan if the share sale had gone through, considering the company had just announced that it was expanding Kogan Mobile into New Zealand and that it will also start selling whitegoods and kitchen appliances. I can’t blame them for wanting to sell, if I owned shares I’d want to sell too.

Even with the large decline today, the share price has risen by 478% over the past year. Kogan has announced a number of new segments to its business in recent months like NBN internet, pet insurance and life insurance.

I believe there is a lot to like about Kogan’s offering and therefore the potential profit growth.

However, I’m not sure that the short-term profit growth potential justifies the large run-up in the share price. Indeed, I don’t think management would be so keen to sell shares if they thought shares were good value today (or yesterday).

Foolish takeaway

Kogan could be one of the main winners with the steady move to online retailing away from bricks and mortar stores. Kogan is an interesting growth story, but for now I’ll be sitting on the sidelines.

Instead, I'd rather put my money into one of these top shares that are trading at good value.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia 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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