Investors gave shares of the publicly traded Manchester United (MANU 2.08%) football club (although we all know they really play soccer) a red card this morning, selling off the stock by 14.3% through 11 a.m. EDT.
And the Red Devils have only themselves to blame.
More precisely, they have some of their biggest insider shareholders to blame. As announced this morning, the Kevin Glazer Irrevocable Exempt Family Trust and the Edward S. Glazer Irrevocable Exempt Trust, which own a combined 40.4 million shares of the company (almost 25% of shares outstanding, according to data from S&P Global Market Intelligence), will be selling 9.5 million of those shares in a secondary offering that will close on Oct. 8.
No specific sales price was named in the announcement; rather, the shares will be sold "at market prices" -- which as already noted have plummeted precipitously this morning.
Manchester United shareholders who aren't selling can't expect any benefit from this deal, because in a secondary offering by insider shareholders, the company doesn't receive any of the cash from the sale. That's the bad news.
The good news is that because Manchester United won't be issuing and selling any new shares, neither do investors need to fear that their ownership of the company will be diluted by this sale. Really, the only reason the stock is falling today is that investors fear that 9.5 million shares being suddenly put up for sale (5.8% of all shares outstanding) will potentially drive the stock price down.
In short, today's sell-off is a self-fulfilling prophecy.