K-Swiss Insiders Sell Off Shares as Stock Prices Keep Rising
By ANDY FIXMER
Steven Nichols, chairman and president of K-Swiss Inc., has taken advantage of the Westlake Village-based athletic shoe maker’s rising share price, cashing in $14.7 million worth of stock so far this year, according to securities research firm Thomson Financial.
The sales, made from January to August, come as the shares have been on a steady upward march to a high of $43 earlier this month. The data collected by Thomson does not include Nichols’ Sept. 4 filing with the Securities and Exchange Commission disclosing that his family trust plans to sell another 250,000 shares valued at $9.2 million.
The sales have reduced Nichols’ holdings in the company’s Class A shares to 200,506 shares as of Sept. 4, from 266,400 shares reported in the company’s April proxy statement filed with the SEC. Nichols had control of 92 percent of K-Swiss Class B stock, representing more than 4.7 million shares, at the time of the proxy filing. The Class B shares have 10 times the voting power of Class A shares, the proxy said.
Nichols said his selling patterns haven’t changed, but as the company’s stock price has quadrupled during the past three years the sums have become much larger.
“It’s about re-diversifying my personal assets,” Nichols said. “About 80 percent of everything I own is in a single small cap stock. My other investments are not growing quite as rapidly, I assure you.”
Nichols was not alone in taking advantage of the rising share price.
In July and August alone, company officers and directors sold tens of thousands of shares, according to data collected by Thomson Financial.
George Edward Powlick, chief financial officer, sold 10,000 shares valued at $372,000; Lawrence Feldman, a director, sold 24,000 shares valued at $921,000; Peter Kent Worley, vice president of product development, sold 17,999 shares valued at $671,988; Senior Vice President of Sales Joseph Thomas Harrison sold 14,400 shares valued at $531,645; and Preston C. Davis, vice president of sales, sold 7,000 shares valued at $267,450.
In all, K-Swiss directors and officers sold shares valued at nearly $11.1 million in July and August, according to Thomson Financial.
As a result of the stepped up activity, in August Thomson Financial lowered the company’s Insider Rating to 4 on a scale of 1 to 10 1 being the most bearish from 8.
The rating is lower than the footwear sub-industry rating of 5.14 and apparel industry average of 5.01. Last week, after another spate of selling, Thomson lowered the company’s rating to 2.
Kevin Schwenger, an insider research analyst with Thomson Financial, said while Nichols’ explanation makes sense, if the trend continued it could be a cause for concern.
“You can’t ignore the fact he’s selling more than usual,” he said. “The third quarter selling is the highest we’ve seen, but we would want to see another month or so of selling before reading anything negative into it.”
Nichols argued that while the selling activities appear high, during the past decade the company has spent more than $60 million buying back its stock.
“We are bullish about our stock,” he said. “There’s far more buying by the company than there is selling by the officers.”