The main reason why KSW’s stock price keeps declining is because Floyd Warkol, Chairman and Chief Executive Officer, keeps selling shares of the company. Who wants to be on the other side of the trade? I do, because I know that he is almost done, and the stock just closed at $2.73 per share. The company has no debt and $2.42 per share of cash and marketable securities on the balance sheet. You might be thinking that the company must be losing money or something. But it is not. Not only is it profitable, it is the top HVAC contracting company in New York. Even Donald Trump used them and you know that Trump doesn’t just hire anybody.
Warkol was granted stock options in 1995 under the company’s employee stock option plan. If these options are not exercised, they will expire on December 31, 2010. The CEO started selling his shares at the end of March 2010. His continuous selling put downward pressure on the stock price and kept other investors from buying. Very few investors have the courage to buy the stock of a company when the CEO is selling. It doesn’t matter to them that he still owns 10 percent of the company and intends to hold shares for the long term.
As of July 16, 2010, he sold 89,100 shares out of 105,000 shares, which means that he only has 15,900 shares left to sell. He can easily be finished within a month. When he is done, guess what is likely to happen to the price of this stock? Buckle up and enjoy the ride.
I, or persons whose accounts I manage, own shares of KSW, Inc at the time of this posting. This posting is not a solicitation to buy or sell securities. Neither Mariusz Skonieczny nor Classic Value Investors, LLC, is responsible for any losses resulting from purchasing shares of KSW, Inc. You are advised to consult your financial advisor or conduct the due diligence yourself.