Investors have been worried about insider sales at Activision (ATVI) ever since a 2002 incident when company execs sold off holdings right before a sharp downturn in the share price.
So yesterday when Activision CEO Bobby Kotick and co-chairman Brian Kelly together dumped 3.2 million shares, the market got spooked. The stock’s price tumbled up to 9.5%, to recover down 4% on the day.
In a note to investors, Cowen’s Doug Creutz says there’s nothing to worry about in the Kotick/Kelly sale:
We note that over the past few years, Activision’s executive officers rarely had available windows to sell stock. Following the merger of Activision and Vivendi Games, the company introduced a 10b-5 plan for Kotick to sell stock on a planned and regular basis, which it subsequently rescinded following the decline in the stock price this past fall. The options Kotick exercised were due to expire within one year and represent less than 3% of his total equity exposure.
Doug repeats his longstanding view that Activision’s guidance is “very conservative.” We’ll see.
Image dfarber / Flickr