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Kohl's Insider Selling Will Force Me Into Less Net Exposure

Dallas Salazar profile picture
Dallas Salazar
5.2K Followers

Summary

  • KSS is trading near all-time highs not seen since 2007 and just reported excellent preliminary SSS and FY EPS guidance.
  • So why is Sr. EVP Kenneth Bonning selling huge percentages of his exposure away?
  • Despite these sales I'm still willing to bet KSS prints all-time highs in the next 60 days and runs hard into spring - BUY KSS.

Kohls Corporation (NYSE:KSS), whose stock has been on a tear since early-2013 - shares are up ~75%, just announced a guidance update last week that has shares trading at all-time high levels not seen since 2007. The company pre-announced Q4 comp sales growth of 3.7% and updated its fiscal 2014 diluted earnings per share guidance to $4.20 - $4.22.

All this after three straight quarters of missing revenues expectations and two out of three quarters missing EPS expectations. So, you would think that this would be the time for management to be getting uber-bulled up and pounding the table to analysts for higher price targets and institutional buying. Unfortunately for KSS bulls, one member of management has taken the return to all-time highs as a reason to dump shares.

Kenneth Bonning, sr. executive and vice president, in a Form 4 that went public on SEC.gov on 02/06/2015 disclosed that he sold away ~20% of his pre-option exercise holdings at ~$66.50. Excluding 85,925 shares of unvested shares of restricted stock Mr. Bonning sold away a whopping ~55% of his pre-option exercise holdings.

I believe this sale to be highly questionable, especially with shares trading where they are and with a steady faction of analysts beginning to believe shares might be reaching levels of being overvalued. SA alone has had 3 of its last 7 articles published with a bearish tone.

Analyst ratings taken from Thomson Reuters I/B/E/S Database show a mixed picture of expectations as well:

The mean and median price targets of 16 analysts show targets below current trading levels with the high target only showing 10% more growth ahead before reaching target.

I personally think KSS has room to run, especially when looking at the fact that the company has an in-line EPS multiple to peers [but lower than both Nordstrom (

This article was written by

Dallas Salazar profile picture
5.2K Followers
Dallas Salazar is the CEO an Austin-based consulting firm that specializes in private company lifecycle management, up to and including taking companies public, and in helping consult publicly traded companies. Mr. Salazar is also a venture investor in a portfolio of energy and commodity startups, including startups extracting oil, natural gas, helium, and carbon dioxide, as well as engaged in the business of large scale carbon sequestration. Mr. Salazar has recently had large exits in Comstock Resources, Eclipse Resources, Southwestern Energy, Atlas Lithium, Torchlight Energy, as well as numerous privately held natural resource and commodity extraction ventures.

Analyst’s Disclosure: The author is long KSS. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

The author is long KSS via the APRIL 17, 2015 CALL options with a strike price of $70 and a premium of $2.65.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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