This ASX 300 company director just cashed out $16 million worth of shares

Should investors be worried when a CFO cashes out $16 million?

| More on:
A woman sits at her computer with her hand to her mouth and a contemplative smile on her face as she reads about the performance of Allkem shares on her computer

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

When a director of any ASX 300 company decides to cash out shares, the usual reaction from shareholders is one of raised eyebrows.

After all, ASX directors aren't exactly amongst the lowest-paid workers in the country. And investors of an ASX 300 share like to see the fortunes of the people who are highly paid to run their companies as closely aligned as possible to their own.

But that's what investors in ASX 300 online retailer Ltd (ASX: KGN) are confronting today.

The Kogan share price has been on a tear over the past few weeks, thanks to a very well-received earnings report last month. Since that report was dropped on 26 February, this ASX 300 stock has rocketed a whopping 35% or so. That's including the 1% rise today thus far.

This rise put the Kogan share price up an eye-watering 89% over the past 12 months.

But a Kogan director seems to have taken advantage of this share price surge.

According to an ASX filing this morning, David Shafer made an off-market bulk sale of shares yesterday. Shafer is Kogan's chief financial officer, chief operating officer and executive director.

Shafer reportedly disposed of 2 million Kogan shares for a price of $8 each. For the mathematically challenged readers out there, that equates to a $16 million sale.

Prior to this sale, Sahfer owned approximately 5.23 million shares. As well as 1.4 million options.

Before any ASX 300 investors jump the gun, Kogan did release an explanation of this sale in conjunction with its notice. Here's what it said:

The Company notes that with no share sales for more than two and a half years, David has decided to diversify some of his investments.

He remains committed to the Company and has retained the majority of his shareholding. He also has equity-based compensation, including options to align his interests over the long term.

Should shareholders of this ASX 300 stock worry about this sale?

It is universally regarded as a good thing to have directors of an ASX 300 share (or any share for that matter) to be as financially aligned as possible with shareholders.

However, it is good financial practice for anyone to diversify their wealth, including ASX 300 directors. Having a majority of one's wealth tied up in one stock is something that no one would recommend as sound financial management.

So at the end of the day, it's up to each shareholder to make an individual decision of how they feel about this sale.

Motley Fool contributor Sebastian Bowen has positions in The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended The Motley Fool Australia has recommended The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Consumer Staples & Discretionary Shares

A female Woolworths customer leans on her shopping trolley as she rests her chin in her hand thinking about what to buy for dinner while also wondering why the Woolworths share price isn't doing as well as Coles recently
Broker Notes

Woolworths shares 'less placed' says top broker

Could the supermarket giant's share price be under pressure?

Read more »

Concept image of man holding flames in both hands.
Consumer Staples & Discretionary Shares

3 things smart investors know about Guzman y Gomez shares

These are some spicy facts about the company.

Read more »

Close-up of a woman waring a hay and smiling as she carries shopping bags over her shoulder.
Consumer Staples & Discretionary Shares

Why these ASX retail shares are surging while the market dives

These shares are avoiding the selloff. But why?

Read more »

A team in a corporate office shares a pizza while standing around a table chatting about the Domino's share price and Pizza Hut's threat to the business
Consumer Staples & Discretionary Shares

Down 10% in a month, is this the biggest ASX 200 bargain share right now?

With shares down 10% in a month, is this ASX 200 stock now a screaming bargain?

Read more »

A woman ponders over what to buy as she looks at the shelves of a supermarket.
Consumer Staples & Discretionary Shares

Have ASX investors missed their chance to buy Woolworths shares?

After a sharp recovery, Woolworths shares might not be on sale anymore...

Read more »

A woman holds a piece of pizza in one hand and has a shocked look on her face.
Consumer Staples & Discretionary Shares

Why are Domino's shares crashing 9% today?

Domino's is shutting up to 80 underperforming stores in Japan.

Read more »

Young happy athletic woman listening to music on earphones while jogging in the park, symbolising passive income.
Consumer Staples & Discretionary Shares

Why is this ASX 300 retail stock surging 7% today?

How did this footwear retailer perform in FY 2024? Let's find out.

Read more »

Confused African-American girls in casual clothing standing outdoors and comparing information on smartphones.
Consumer Staples & Discretionary Shares

4 reasons to buy GYG shares (and one reason to sell)

After a successful IPO, where to next for investors?

Read more »