Are Insiders selling Sky City Stock?

With Sky City Entertainment Group [SKC.NZ] announcing a profit next Tuesday, the recent dramatic drop -SKC shares have fallen by almost 9% in 2 weeks - in share price for this company could mean a number of things.

The obvious reason is that investors are simply no longer interested in holding because of overall market sentiment and this has been shared with other stocks falling in a similar fashion - Telecom NZ [TEL.NZ] but one example.

The other reason could be insiders selling due to some sort of negative news coming in the profit announcement.

This stock has been prone to insider selling before profit announcements in the past and I wouldn't discount that insiders are doing the same again before Tuesday.

With a good result indicated by management last year it cant be the profit part of Tuesday's announcement but it could be a slightly worse number than telegraphed.

Perhaps a dividend cut, a poor future outlook or something unexpected is on the cards.

This is all idle speculation on my part but the big share price drop before another profit announcement is worth noting.

Of course if nothing material is going on the share price drop represents another opportunity to buy this stock, long or short term.



Sky City shares dropped 6c to NZ$3.10 in a down market on larger than average volume yesterday.

Disclosure: I own SKC shares in the Share Investor Portfolio


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c Share Investor 2010

Insider Trading on Sky City shares

Most people who watch the New Zealand Stockmarket closely know that there is frequent trading of shares based on insider information, the New Zealand Stockmarket is just like a small town, everyone knows everybody else's business.

I am not a share price follower, more of a company watcher but I have been looking at movements in Sky City Entertainment Group [SKC.NZ] share price pretty closely over the last 9 years or so.

I have come to the conclusion that Sky City is one of the biggest insider traded stocks.

Every reporting period you can always get a good idea about the profit result before it comes out, based on whether the insiders have traded on good or bad company news.

Yesterday's announcement of an upgrade in Sky City profit is a case in point in insider plays.

A very large volume of almost 8 million shares valued at nearly NZ$ 24 million was traded and the share price ended up 19c or just over 6.5%.

Over the last few days Sky City share price has taken a marked rise (see chart above and data below) and big volumes have gone through over the last 3 trading days.

Date	Open	High	Low	Close	Value	Volume
21 Jul 2009	2.880	3.100	2.880	3.050	23923490.3	7798468
20 Jul 2009	2.790	2.860	2.780	2.860	6702303.15	2373190
17 Jul 2009	2.660	2.780	2.660	2.780	18663101.84	6845077
16 Jul 2009	2.730	2.730	2.670	2.680	5240196.25	1942297
15 Jul 2009	2.660	2.690	2.630	2.690	2766984.42	1041257
14 Jul 2009	2.630	2.650	2.620	2.650	3258738.82	1240619
13 Jul 2009	2.660	2.660	2.620	2.620	1262989.85	480511
10 Jul 2009	2.680	2.690	2.650	2.650	1367532.26	514690
09 Jul 2009	2.640	2.680	2.640	2.680	1810909.48	676984
08 Jul 2009	2.630	2.650	2.620	2.650	5499837.7	2087514

Data From NZX

As I mentioned in a column on Monday there was big volume going through on Friday the 17 July when over $18 million of stock was traded and the stock was up 10c. Insiders have known for a while about the profit upgrade because the stock price has risen from a recent low of $2.58 to finish nearly 30c higher at close of market Monday 20 July, before the profit upgrade was made public yesterday morning.

The bulk of insider trading was done on Friday the 17 July, bought by institutions/brokers for a quick buck and a large part of that was sold back to the mum and dad investor today.

It isn't necessarily wrong for insiders to know about profit upgrades like this one because they get briefed and updated by company management before the great unwashed, but it is illegal for them to trade shares in the company based on that knowledge.

Unfortunately nothing will be done by Mr Mark Weldon, CEO of the NZX , because it is his colleagues (the brokers) that are making money, and his NZX is clipping the ticket along the way as large volumes of shares are traded.

Who needs a monkey with a dart when you can trade on insider info?

Disclosure I own SKC shares in the Share Investor Portfolio

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c Share Investor 2009

535 Ex Trans Rail Holders due $10 million

I hate to see people lose money and not get money that is due to them.

The Securities Commission is actually earning its money in this case - I knew they were good for something!

Some 535 shareholders are still eligible for compensation from settlement of the Tranz Rail insider trading case. The names of these shareholders are listed on the Commission's website at www.seccom.govt.nz. They are invited to contact the Commission by 24 July 2009 for information about how to claim their compensation. Entitled shareholders will need to verify their identity and shareholding details. Full Press Release

The claim relates to the Fay Richwhite Trans Rail insider trading case where the aforementioned made a $27 million payment to the Securities Commission, without admitting guilt, to insider trading.

The case was unable to be proven by the Commission but there is clear evidence of the insider trading and most of us are aware of information that points to Messrs Richwhite's guilt.

The claim for those 535 shareholders with money outstanding is time limited, so get off your butt and contact the Securities Commisssion before the State gets it.

Just as an aside, funny that last year the same company was bought on behalf of the taxpayer under similar fraudulent circumstances by one Michael Cullen.

I wonder if the SEC COM will be chasing Mr Cullen?

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Securities Commission - Make your claim here
List of eligible shareholders

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