Overstock CEO Sells $20M Worth of Stock, Calls Investors Not to Worry

Overstock CEO Patrick Byrne has sold about $20 million worth of his stock in the company. He explained the reasons for the sale in a letter to investors.

Patrick Byrne, CEO of e-commerce retailer Overstock, sold about $20 million worth of stock in a span of several days, telling investors to stay calm. He sold $15.8 million worth of stock last week and $4.9 million worth on Monday, as shown in a form 4 SEC filing. Overstock, which entered the cryptocurrency industry through its subsidiary tZero, saw its share price declining since Byrne started the selling process, though it is moving in a sideways trend since Friday.

Byrne first announced his intention to sell some of his Overstock shares in a SEC filing published in March. He said the raised funds would be used to fund sidecar investments with Overstock and would be mostly reinvested in the company and its subsidiary Medici Ventures.

Recently, he sent a letter to investors explaining the reasons behind the sale and said they shouldn’t worry that he cashed in his 10% stake.

 “I’ve cashed in 1/10 of my chips (most of it, to reinvest next to you). Don’t worry, I’m still in the game, and we’re going to bring this House to its knees,” the letter reads. “Thus, I am eating a double dose of my own cooking, as months ago I promised you I would.”

He also presented six reasons behind his intention to sell the stock:

  1. Byrne said that in a few days he would reinvest most of his funds into two co-investments with Overstock and Medici Ventures.
  2. “You will soon see me honor several professors from my distant past who should not be asked to wait any longer,” he said.
  3. He has “to pay Uncle Sam his cut”.
  4. Byrne plans to invest some of his money through Medici Ventures, aiming for some of the most interesting blockchain projects.
  5. The Overstock CEO noted that he announced six months ago that he needed to sell stock in the current quarter to meet some other obligations.
  6. Byrne stated that he had been working for about 18 years at the company and had sold only an insignificant stake before. Also, he hasn’t drawn a salary, so the current move makes more sense in this context.

Overstock launched its Medici Ventures subsidiary in 2014 in a bid to bet on blockchain startups. Moreover, Byrne previously said that he was ready to restructure his entire company to focus on blockchain. However, the stock price fell about 60% year-to-date probably because investors associate the company with the crypto space, which, according to Byrne, this is not the case.

“I sadly note that over the last 180 days the correlation between OSTK's and Bitcoin's daily movements has been 85.5%, and again warn people: we don't have significant holdings of Bitcoin,” he wrote in his letter.

Overstock’s share price jumped about 21% last month after the company said that Hong Kong-based GSR Capital, a private equity firm, would invest $374 million in Overstock, with $270 million of the investment being allocated tor its subsidiary tZero. According to the plan, GSR Capital had to take an 18% stake in tZero at a valuation of $1.5 billion.

In May 2018, tZero partnered with BOX Digital Markets to create an exchange for security tokens. The two companies have established a 50/50 joint venture to develop the exchange. Byrne said that the product would be ready in the third quarter of this year.