Academy Sports insiders forecast stock selloff as stock climbs

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Major inside shareholders of Academy Sports and Outdoors are preparing to sell up to 13.8 million shares, benefiting from a sharp rise in retailer Katy’s share price since its debut in October.

Kohlberg-affiliated funds Kravis Roberts & Co., which control 67.7% of the company’s shares, plan to sell between 10.3 million and 11.9 million shares, reducing its stake to no less than 54.6 %. Family members of founder Max Gochman plan to sell up to 611,000 shares, reducing their stake to no less than 8.45%.

The company is not selling any shares in the offer, which according to a filing with the Securities and Exchange Commission, would be at the maximum offered price of $22.16. At that price, KKR could see up to $264 million and Gochman’s descendants $13.6 million.

Shares of Academy closed at $22.08, down 9.1% on Wednesday. Trading was particularly active, with 3 million shares traded between hands. Volume had only cracked 1 million shares four times earlier this month.

The Academy began trading on Oct. 2, a day when markets were rocked by news that then-President Donald Trump had tested positive for coronavirus and a mixed-jobs report. The Nasdaq, where the Academy trades, ended the day down 2.2% and the S&P 500 down 0.96%.

The offer came out at $13 per share, less than the expected $15-17 per share. Ken Hicks, the company’s chief executive, said at the time that the drop in price had a lot to do with initial investors not being able to travel as they normally would, due to the pandemic, to see how Academy differed from the competition.

“A lot of people making the markets haven’t had a chance to see our stores,” he said. The company closed its first trading day at $12.99. “Based on the market situation,” he said, “I felt pretty good about where we ended up for the day.”

In December, the company reported earnings of $59.6 million (74 cents per diluted share) for the third quarter ended Oct. 31, compared with $28.6 million (38 cents) in the same period in 2019. Revenue climbed 18% to $1.35 billion from $1.15. billion in the third quarter of 2019.

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