THE SPARK: On Monday Yandex said that co-founder and chief technology officer Ilya Segalovich, along with shareholders BC&B Holdings B.V., Belka Holdings Ltd. and Emerald Trust, are selling about 24.3 million shares.
BC&B holds shares on behalf of various funds advised by Baring Vostok Capital Partners Ltd. Board member Elena Ivashentseva is a senior partner at a Baring's subsidiary. Belka is an affiliate of Yandex CEO and co-founder Arkady Volozh.
The selling shareholders are giving underwriters a 30-day option to buy up to an additional 2.4 million shares. Yandex won't receive any proceeds from the offering.
The company also announced Monday that it will buy back up to 12 million shares.
THE ANALYSIS: Jefferies analyst David Reynolds said in a client note that he'd expect the market to have a negative response to the insider selling. The analyst said he doesn't have a problem with Baring Vostok reducing its exposure to a public company. Reynolds added that Volozh and Segalovich have not sold shares of the company before and will still have significant Yandex stakes after the offering closes.
"Nevertheless, insider selling is rarely well received," he wrote.
Reynolds kept a "Buy" rating and $35 price target on Yandex.
SHARE ACTION: Yandex dropped $1.93, or 7.7 percent, to $23.10 in afternoon trading. Over the past 52 weeks the shares have traded in a range of $16.65 to $28.14. The stock is up 16 percent this year.