Sina Corp. surged the most in 11 years after the Chinese Internet company said its chief executive officer has agreed to buy $456 million of new shares.
The stock rallied 23 percent to $50.21 in New York on Monday. Trading volume of 13 million shares was more than 8 times the daily average of the past three months.
The stock jumped after Sina said in a statement that Chairman and CEO Charles Chao has agreed to buy 11 million shares for $41.49 apiece, the average closing price for the 30 trading days through Friday. Prior to Monday’s gain, Sina, which operates a microblogging service similar to Twitter Inc.’s, had dropped 8.9 percent from this year’s high.
“Sina’s management buying more shares is the insiders’ vote of confidence about its business,” Tian X. Hou, the founder of research firm T.H. Capital LLC, said by phone from Beijing Monday. “Sina has several business lines, and the company has a better opportunity to unlock shareholder value by allowing separate listing of those businesses. Its stock price has bottomed and is headed for further gains.”
Shanghai-based Sina said Chao has agreed to a six-month lockup restriction. The company didn’t say how it intends to use the capital raised in the share sale.
Weibo Corp., Sina’s microblogging unit which debuted in the U.S. in April last year, gained 6.5 percent to $16.88. Sina has market capitalization of $2.9 billion, compared with $3.4 billion for Weibo.
“It’s a big dollar amount for a CEO,” Brendan Ahern, chief investment officer at Krane Fund Advisors LLC in New York, said by e-mail. “His actions show his belief the stock is undervalued. The investment provides ample cash for M&A and paying for traffic to Weibo.”